First Creditor Payments Scheduled
FTX Digital Markets, the Bahamian subsidiary of the collapsed cryptocurrency exchange FTX, will begin its first wave of repayments to impacted creditors on Feb. 18. In a Feb. 4 update from FTX creditor Sunil Kavuri, claimants under the “convenience class” would receive their adjudicated claim amount in full, along with 9% interest per annum dating back to November 2022.
In this regard, the distribution notice outlined that claims by creditors of up to $50,000 were filed and hence could be paid in the first turn. The move, which marked the latest significant moment in a longer-running bankruptcy, finally brings some financial hope for victims from the downfall of FTX.
Claims Less Than $50,000 Get Fully Repaid
The first round of payouts goes to creditors who filed recovery through BitGo, a custodian of digital assets helping facilitate the distribution. It’s unknown whether Kraken, which also is distributing funds for FTX, will pay out on that timeline.
If all claims are processed smoothly, then claims against the estate of FTX will add up to over $16 billion. According to a proposed repayment schedule, the relevant users should start receiving funds in early March.
FTX Bankruptcy and Reorganization Plan
The collapse of FTX in November 2022 led to a prolonged bankruptcy hearing, as litigation was pursued in an attempt to claw back losses. After more than two years of litigation, FTX’s restructuring plan took effect on Jan. 3, which should allow for compensation to creditors.
The plan follows months of attempts by the bankruptcy administrators to try and recover money by liquidating assets and reaching settlements with other crypto firms.
Final Chapter of FTX’s Downfall?
Until a liquidity crisis forced it to break apart within a week in November 2022, FTX had once been among the world’s biggest cryptocurrency exchanges. It sent CEO Sam Bankman-Fried to resign. Bankman-Fried later was found guilty of fraud and financial impropriety, receiving a sentence of 25 years.
Others in its executive management structure who pleaded their way to lighter jail terms by cooperating with investigators and prosecutors include the former head of trading at Alameda Research, Caroline Ellison, and FTX co-founder Gary Wang.
With creditor repayments now underway, the FTX saga nears its conclusion, bringing long-awaited relief to affected users.
