Bankrupt Crypto Fair FTX starts with payout of $ 5 billion to creditors

One of the greatest bankruptcies in the history of the crypto sector now finally gets a concrete outcome. Thousands of ftx creditors can expect a payment from 30 May, rising to as much as 120% of their original claims. The scheme is part of the second phase of the recovery plan that was previously approved by the American court.

Bitgo and Kraken arrange the payments

Now that the cryptomarkt has been in an upward trend for some time and the American regulations appears to be relaxed, the prospects for former FTX customers are also improving. The damage that FTX caused in 2022 is thus partly compensated in a sector that is now looking ahead again.

The payouts are provided by Bitgo and Kraken. They ensure that the funds are transferred within one to three working days, depending on the verification of the claims. According to the FTX Recovery Trust, more than 90% of all verified claims are already in the payment phase.

Who gets what: distribution per creditors group

The creditors of FTX are subdivided into four categories, each with their own repayment percentage – depending on the type of claim and the relationship to the bankrupt platform.

For private customers with uncovered receivables, such as users who had money or crypto on their FTX account, the average reimbursement is around 61%. With relatively small credits, this is favorable because there is a minimal payment threshold and completion in favor of the customer.

It is striking that some internal claims between FTX and related sister companies-for example, contracts between entities within the FTX group-are fully paid, in some cases even up to 120%. This is because these debts are legally designated as ‘administrative preference’ within the bankruptcy procedure.

The so-called Class 5 creditors, such as trading parties, lenders and counterparties of Hedgefonds Alameda Research, must settle for a lower fee. For them, the expected reimbursement is between 54% and 72%, depending on the nature and substantiation of their claims. This group is being treated less favorably because their claims are considered more risky or more disputable.

Course differences are becoming different for customers

The amount of the repayments is based on the value of everyone’s credit in US dollars at the time of the bankruptcy in November 2022. For many customers, this is disadvantageous: cryptos such as Bitcoin and Solana have since risen considerably in value. For example, anyone who had 1 BTC on FTX now receives an amount that corresponds to the value of that one bitcoin in November 2022 – and therefore considerably less than what the same bitcoin is worth today.

For other customers, especially those with tokens that have fallen or disappeared since then, it turns out more favorably. In their case, the payout is worth more than their current cryptoportfolio.

The timing of the repayments is striking: they coincide with a period of growing optimism in the cryptomarket. Bitcoin and other large coins rise in value, and many investors speculate on a new ‘altseason’ – a phase in which smaller coins perform above average. For victims of the FTX bankruptcy, this market situation can offer a solution to make up for (part of) their losses.