FTX has announced that it will begin distributing over $1.2 billion in repayments to victims of its bankruptcy.
Defunct crypto exchange FTX has announced that it would start distributing more than $1.2 billion in repayments to all the victims who suffered from its bankruptcy. More than two years after the crash, the new administration at FTX is working to help users and creditors who have been unable to access their funds.
FTX users that have $50,000 or more worth of claims in digital assets have up to January 20 in order to meet their repayment obligations. According to Sunil, a prominent FTX creditor and member of the FTX Customer Ad-Hoc Committee, which represents over 1,500 creditors, FTX will begin the repayment of the claims soon after the January 20 deadline.
FTX repayments
Initial Distribution Schedule
Claims < $50k = $1.2bn
Jan 20th: FTX has given until 20th Jan to fulfil pre distribution requirements for initial distribution
Repayments likely won’t start before then
Feb 25: Likely (up to 4th Mar)
— Sunil (FTX Creditor Champion) (@sunil_trades) January 12, 2025
Interestingly, this January 20 deadline, coincides with Donald Trump‘s inauguration, as the crypto industry expects swift policy rollover and greater regulatory clarity thereafter. Furthermore, all eyes are on the approval of the Bitcoin Act which proposes building a strategic Bitcoin reserve for the United States.
Will FTX Repayment Trigger Crypto Market Volatility?
As per the FTX restructuring plan, users who will claim up to $50,000 will be the first group of investors to receive payments. As per the approved plan in October 2024, 98% of the FTX users will receive 119% of the declared value of their funds.
However, not all creditors are happy with the FTX restructuring plan and its repayment model. As per the plan, the crypto exchange will reimburse claimants as per crypto prices during the time of bankruptcy.
However, since the collapse in November 2022, Bitcoin price BTC $85 681 24h volatility: 1.5% Market cap: $1.70 T Vol. 24h: $27.76 B has surged by a massive 370% so far along with a similar rally in other altcoins as well. Despite this, the repayment will set a milestone in addressing customers’ past damages and rebuilding trust within the industry.
Once FTX begins its repayment process, investors are expecting greater crypto market volatility. According to Anndy Lian, author and intergovernmental blockchain expert, the repayments are likely to evoke mixed reactions from investors, influenced by their varying levels of risk tolerance. He said:
“Smaller investors, who’ve been hit hard by FTX’s collapse, might be more inclined to sell for financial security. Those with a bit more faith in the long-term prospects of crypto might stick it out, betting on future growth. It’s all about individual circumstances and risk appetite.”
On the other hand, Lian also believes that the Mt. Gox repayment sets a precedence wherein a lot of folks have chosen to hold on their coins instead of liquidating their holdings.
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