FTX to Repay $11.4 Billion to Major Creditors by End of May

FTX will repay creditors with claims >$50,000 starting May 30, but will only receive the value of the assets as of November 2022 instead of the current value.

More than 27 months after declaring bankruptcy, FTX will begin the distribution process to creditors with claims over $50,000 starting May 30, 2025, Bloomberg reported. The company currently has $11.4 billion in cash to pay creditors, including institutional and individual investors who previously held assets on the FTX platform.

Previously, creditors with claims under $50,000 had received money since February. However, due to the large number of claims – up to 27 quadrillion, the settlement process could take months.

In addition to pressure from creditors, FTX is also under pressure from 9% interest per year on unpaid debts. Meanwhile, the $11.4 billion that the company is holding only yields a lower yield than this. This means that the longer the payment is delayed, the larger the amount FTX has to pay.

Resolving claims is also more complicated due to the large number of fake or duplicate claims. Many claims do not comply with KYC rules, slowing down the processing.

Although FTX claims to have repaid 118% of the debt value, many creditors say this is a misleading statistic. The payments will be distributed in fiat currency based on the value of the assets on November 11, 2022, when FTX filed for bankruptcy, rather than the current price.

The price of Bitcoin at the time of FTX's bankruptcy was around $16,000. Under the repayment plan, users who lost 1 BTC on FTX will be paid back $16,000 in cash, rather than receiving 1 BTC or $83,000 at current prices. This is frustrating for creditors as many crypto assets have increased in price over the past two years, for example:

·       Bitcoin (BTC) is up nearly 500% since then.

·       Solana (SOL) is up at least 700%, XRP is up 500%.

·       Ethereum (ETH) is up 50% despite volatility.

This means many creditors are losing out on huge profits if they are paid in crypto instead of cash. “The payment will be a closure for many affected by this, but it is also a huge loss because they did not receive the true value of their assets,” said Sunil Kavuri, the representative of FTX’s largest creditor group.

As Coin68 reported, FTX has received court approval for a payment plan in October 2024. With payments starting in May 2025, major creditors can finally get their assets back after more than two years of waiting, although not in the way they wanted!

Regardless, FTX’s plan to repay creditors in the next 2 months is expected to spark a “bullish” market that has been depressed by the negative tariff news of the Trump Administration in recent times - this is also one of the “top signals” that pushed Bitcoin to reach $100,000 by December 2024.

At the time of writing, the world's largest currency by market capitalization, Bitcoin (BTC), is trading around $83,134, up slightly by about 4% after "plunging" to $76k6 due to investors' concerns about a US economic recession.