FTX plans to distribute $11.4 billion to its creditors starting from May 30, with a process already underway for small claims below $50,000.
Many creditors regret being reimbursed in dollars rather than cryptocurrencies, as the market’s rise since the bankruptcy reinforces their sense of loss.
The procedure has been slowed down by a massive influx of dubious claims and the accumulation of legal interest at 9% per year, increasing pressure on administrators.
A long and complex repayment process
More than two years after the spectacular collapse of FTX, the cryptocurrency exchange platform is about to enter the second phase of creditor repayment. According to court documents filed this week in Delaware, the first payments will be made on May 30. A total of $11.4 billion in cash reserves has been gathered for this new step to compensate for the massive losses caused by the bankruptcy.
Among the main beneficiaries are institutional investors and companies that stored digital assets on FTX. Creditors with claims below $50,000 have already started receiving their compensation, a sign that the repayment process is now underway.
Ongoing frustrations among creditors
While the prospect of recovering some of the lost funds is a relief for some, it also stirs up lingering bitterness. Many creditors hoped to be reimbursed in cryptocurrencies, not dollars. Since FTX’s bankruptcy in 2022, the price of Bitcoin has multiplied by more than four, accentuating the sense of loss among affected users. For many, receiving dollars today is a double blow: being robbed and missing out on the soaring market.
Billions of dubious claims
The procedure has been heavily delayed due to the astronomical volume of claims to be processed. According to Andrew Dietderich, the lawyer in charge of the case, FTX has received ’27 quintillions’ of claims. The majority of these claims are either duplicates or purely fraudulent, further complicating an already complex legal process.
This absurd figure – obviously exaggerated to highlight the extent of the chaos – reflects the difficulty of distinguishing legitimate claims from attempts at abuse, in a context where the platform was once a hub for opaque financial flows.
The urgency of interest payments
In addition to the capital repayments, FTX will also have to face an increasing bill for interest. According to the legal framework, creditors with valid claims are entitled to an annual interest rate of 9% as long as their claims are not settled. This additional financial pressure encourages the administrators to speed up the process, especially since the company’s substantial liquidity generates only modest returns.
A soon-to-be-turned page?
With this second repayment, a crucial stage is opening in one of the most high-profile financial scandals in the history of cryptocurrencies. But beyond the numbers, it remains to be seen whether this outcome will restore a semblance of confidence in an ecosystem still marked by the excesses of the Sam Bankman-Fried era. For the thousands of victims, May 30th could mark the beginning of a sense of relief or a new cycle of frustration.
