FTX Repayment Plan Kicks Off: Here's What You Need to Know
FTX Set to Commence $11.4 Billion Repayment to Creditors on May 30th
Get ready, FTX creditors! Your long wait is nearly over. FTX will commence repaying major creditors $11.4 billion starting May 30, 2025.
This monumental milestone comes nearly two and a half years after the infamous crypto exchange's implosion. The company has been stockpiling cash to distribute to those with claims exceeding $50,000.
Small fry claimants, with amounts less than $50,000, have already started receiving their much-deserved dough. Approximately 98% of these sheer stooges were paid within two months of the repayment plan's activation.
FTX's bankruptcy attorney, Andrew Dietderich, confirmed the payment schedule in court this week, gearing up to dish out cash to the big-time creditors, including investment firms and institutions.
A Glimpse into FTX's Comical Comeback
The company has pulled off some serious hooliganism to get to this point. Bankruptcy Judge John Dorsey gave the green light to FTX's payout plan way back in October 2023.
John J. Ray III, who previously tackled Enron's dissolution, has been leading the asset recovery squad. These rowdy buccaneers managed to reclaim bewildering amounts of cash by selling stakes in tech companies, property holdings, and digital currencies.
With their successful asset recovery, FTX now boasts more dough than its $11.2 billion in debts. The approved restructuring plan promises that creditors will receive 118-119% of their claim value in bread and circuses, er, I mean cold hard cash.
But creditors ain't too pleased with how their claims are being computed. All crypto holdings are valued based on November 2022 prices, when Bitcoin was only worth 20% of its current worth.
Sunil Kavuri, speaking on behalf of the largest FTX creditor group, expressed mixed feelings about the repayments. "This repayment will definitely slam the brakes on the uncontrolled cries of woe many have suffered in this debacle. But let's just say, repayment at these prices means many ain't gonna see full recovery in crypto terms."
Some folks hoped to receive payment in crypto instead of cash. A select few even tried summoning lawyers, but their chances of success appear lower than a snake's belly after Judge Dorsey forced cash settlements.
FTX is also fighting off an overwhelming amount of sketchy claims. Dietderich warned of having to deal with an unfathomable 27 quintillion total submissions, with billions flagged as fraudulent or exaggerated.
Resolving these disputed claims is becoming urgent. While creditors sweat it out, they rack up 9% annual interest on their claims, creating a financial incentive for FTX to blast through the process pronto.
The bankruptcy crew is currently discussing options for creditors in excluded jurisdictions. Russia, China, and Egypt are among the countries still facing a massive no-no in receiving payments.
The disgraced founder, Sam Bankman-Fried, is serving a 25-year slammer sentence for fraud and was ordered to cough up $11 billion in fines in March 2024. This bankruptcy resolution now ranks among the largest insolvency distributions ever recorded.
In the broader scheme of things, FTX's repayment process signifies a tentative step toward restoring trust in the crypto industry. However, it starkly reminds us of the risks involved with digital asset volatility and poor management oversight.
[1] Chapter 11 Plan of Reorganization: Link[2] FTX Repayment Process: Frequently Asked Questions: Link[3] FTX Repayment Distribution Schedule: Link[4] FTX Asset Valuation: Link
- Despite the controversy surrounding FTX's implosion, the cryptocurrency's investing potential in the business world is noteworthy, as FTX plans to repay major creditors $11.4 billion in finance, marking a significant comeback for the digital currency industry.
- As FTX gradually prepares to distribute funds to its creditors, there has been a call for the cryptocurrency's value to be re-evaluated, with investors expressing concerns about crypto holdings being valued based on November 2022 prices, a time when Bitcoin was only worth 20% of its current worth, potentially affecting the full recovery of their investments.
