Significant Milestone Reached: Pivotal Moment for FTX Debt Settlement after Three Years
Cryptocurrency storage platform BitGo commenced the transfer of payments to the accounts of FTX exchange creditors, marking the second round of debt repayments. In a social media post, FTX creditor representative Sunil Kavuri announced that claims below $50,000 had been credited at a 120% rate, with the excess payment being treated as interest.
Eligible creditors who selected BitGo as an interim intermediary can now observe their payments reflected in their balances. However, check and transfer transactions would be unavailable until May 30, when all payouts are anticipated to be completed. Kavuri confirmed that Bahamas-based account holders had also received their payments, although these transactions remain invisible until May 30.
This development signifies a milestone in a nearly three-year wait since FTX filed for bankruptcy in November 2022. Wallet providers BitGo and Kraken had previously communicated that the repayment process would be completed by May 30, although the final amounts received may vary considerably between users.
With this second payment round, FTX has distributed over $6.2 billion in debt repayments. Claimants caught in the Know Your Customer (KYC) process and those with disputed claims, however, did not receive their payments. Users' frustrations over waiting months, particularly those stuck in the KYC process, were reflected in comments on Kavuri's post.
The repayment process is expected to expand globally, with creditors from Africa, Asia, the Middle East, and Eastern Europe planning to be included. Future payment schedules and timelines will be disclosed in due course. Estimates suggest that the total repayment could reach as high as $16 billion.
Creditors have expressed concerns over the slow pace of the process and its complexity. Proceedings are further delayed by lawyers representing the creditors, who are engaged in ongoing clawback lawsuits. FTX is currently embroiled in various legal battles, such as a legal dispute with Binance regarding a $2 billion share repurchase, and lawsuits against platforms like NFT Star and Delysium due to undelivered tokens.
Creditors have been advised to be cautious against phishing attempts and fraud during the repayment process. Recipients should also note that choosing a service provider irrevocably waives their right to receive cash distributions directly from FTX. Additional record and payment dates for subsequent distributions will be announced in the future, as the estate continues to prioritize different claim classes.
Enrichment DataKEY POINTS:
- FTX is distributing over $5 billion to creditors on May 30
- Creditors with claims under $50,000 have received payments at a 120% rate
- The second repayment round follows the initiation of the bankruptcy restructuring plan
- The repayment process is anticipated to continue globally
- FTX has earmarked $11.4 billion for creditor repayments and has recovered assets estimated between $14.7 billion and $16.5 billion
- Repayments are based on digital asset prices at the time of the bankruptcy filing in November 2022
- The repayment process is proceeding under the oversight of the bankruptcy court and FTX’s appointed leadership
- Creditors have been advised to remain cautious against phishing attempts and fraud during the repayment process and to note that selecting a service provider irrevocably waives their right to receive cash distributions directly from FTX
Businesses and finance sectors are closely monitoring the ongoing repayment process of FTX, as the cryptocurrency storage platform BitGo facilitates the transfer of payments to FTX exchange creditors, using block chain technology. Interim intermediary BitGo has started crediting eligible creditors, with payments reflected in their balances, and all payouts are anticipated to be completed by May 30.
