After navigating two years of complex bankruptcy proceedings, cryptocurrency exchange FTX announced plans to begin repaying claims exceeding $50,000 starting May 30, marking a pivotal development in the company's path toward resolution.
The defunct exchange, which spectacularly collapsed in November 2022, currently holds $11.4 billion in cash reserves to address outstanding creditor claims. According to bankruptcy attorney Andrew Dietderich, the upcoming repayments will focus on major creditors as the company works through what he described as "27 quintillion" claims, many suspected to be fraudulent.
FTX has already started processing payments for smaller "convenience class" creditors, with repayments calculated based on cryptocurrency values from November 11, 2022 - the date of the bankruptcy filing. The company projects creditors will recover 118% of their claims in cash terms.
However, this repayment structure has sparked controversy among affected parties. The dramatic surge in cryptocurrency prices since late 2022 means many creditors will receive substantially less than their holdings would be worth today. For perspective, Solana has risen 650%, XRP 450%, and Bitcoin 500% since the bankruptcy filing date.
Sunil Kavuri, representing FTX's largest creditor group, noted the bittersweet nature of the announcement. While the repayments offer closure, the use of November 2022 valuations leaves many creditors unable to fully recover their cryptocurrency positions at current market prices.
To partially offset the extended wait times, FTX is offering creditors 9% annual interest on their claims during the repayment period. The distribution process is expected to span several months as administrators work through the massive volume of claims and verify their legitimacy.
This repayment initiative represents a major step toward concluding one of cryptocurrency's most notorious corporate failures, though the gap between petition-date and current crypto valuations remains a point of contention for many affected users.