The exchange will distribute payments from its $11.4 billion reserve fund after 27 months of bankruptcy proceedings.
FTX is preparing to begin reimbursing its primary creditors on May 30. According to court documents and a Bloomberg report, the exchange—now led by restructuring expert John Ray III—will start reimbursements for creditors with claims exceeding $50,000, drawing from its $11.4 billion liquidity reserve.
Andrew Dietderich, the company’s attorney, emphasized that FTX is managing an “extraordinary number of claims,” many of which are fraudulent or inflated, totaling what he referred to as “27 quintillion” of claims. Some smaller creditors, classified in the “convenience class,” have already received their reimbursements. All claims related to digital assets are being evaluated based on the date FTX filed for bankruptcy: November 11, 2022.
Dispute over reimbursement
Although FTX has stated that many creditors could receive up to 118% of the value of their claim in cash, critics argue that this figure does not reflect the price increases of Bitcoin and other cryptocurrencies that have occurred since the collapse.
Major cryptocurrencies such as Bitcoin, XRP, and Solana have seen significant increases since the filing. Solana has risen by around 650%, while Bitcoin and XRP have grown by 500% and 450%, respectively.
However, since claims are being settled at November 2022 fiat values, many creditors feel shortchanged. Sunil Kavuri, a representative of a group of FTX creditors, commented:
“This leads to some closure. But the recovery is based on outdated prices—the creditors are not fully compensated in terms of cryptocurrencies.”
BitGo and Kraken collaborate for reimbursements
FTX will also pay an annual interest rate of 9% on outstanding claims. Although reimbursements represent a step forward, the entire process could extend for months as the company works to resolve remaining claims and close the books on one of the largest bankruptcies in cryptocurrency history.
BitGo and Kraken have announced their involvement in assisting FTX’s reimbursements. If all eligible users submit complete claims, FTX could distribute around $16 billion in total recoveries.
