FTX estate to start distributing more than $5B on May 30

FTX Commences Second Round of Repayments to Creditors

Over two and a half years after declaring bankruptcy, cryptocurrency exchange FTX is progressing with its plan to reimburse affected users. The FTX Recovery Trust announced on May 15th the commencement of payouts to a second group of creditors, totaling over $5 billion. These funds will be distributed via crypto firms BitGo and Kraken, reaching creditors within one to three business days starting May 30th.

This disbursement follows the first round of repayments in February, which distributed approximately $1.2 billion. The current round adheres to the exchange’s reorganization plan, allocating assets to five “convenience classes” with distribution rates ranging from 54% to 120%. Future repayment schedules for remaining creditors will be announced subsequently. The debtors anticipate paying up to $16 billion if all claims are filed. The plan projects that 98% of creditors will receive at least 118% of their initial claim value in cash.

A significant point of contention surrounds the valuation of cryptocurrencies used in the calculation of reimbursements. The plan bases these calculations on cryptocurrency prices at the time of FTX’s collapse in November 2022. Since then, Bitcoin’s price has surged over 400%, from approximately $20,000 to over $100,000 at the time of this writing. This has led to criticism from some creditors.

The repayment process unfolds against the backdrop of concluded criminal cases related to the FTX implosion. Former CEO Sam Bankman-Fried received a 25-year prison sentence. Other key figures, including former Alameda Research CEO Caroline Ellison, former FTX Digital Markets co-CEO Ryan Salame, engineering director Nishad Singh, and co-founder Gary Wang, also faced criminal charges and sentencing. However, related legal proceedings continue, with Michelle Bond, wife of Ryan Salame, facing campaign finance charges in New York. The ongoing legal ramifications underscore the gravity of the FTX collapse and its impact on the broader cryptocurrency landscape.