TL;DR
- FTX, the now-defunct cryptocurrency platform, will start the second payout phase of its bankruptcy repayment plan on May 30, distributing over $5 billion.
- Creditors will receive between 54% and 120% of their claims depending on their classification, through the exchanges BitGo and Kraken.
- Although the repayments are in cash and based on asset values as of November 2022, this is considered one of the most successful bankruptcy recoveries in U.S. history.
More than two years after its dramatic collapse, FTX is taking a crucial step forward in its bankruptcy process by initiating the second phase of repayments to its creditors. Starting May 30, over $5 billion will be distributed to clients affected by the crisis that began in November 2022. The operation will be handled by the exchanges BitGo and Kraken, which will transfer the funds within one to three business days to eligible creditors.
Historic Distribution and Surprising Figures
The plan includes payments to various classes of creditors: global customers (Class 5A) will receive 72% of their claims, U.S. customers (Class 5B) 54%, and digital asset lenders (Classes 6A and 6B) 61%. Notably, the convenience creditors (Class 7) will receive 120%, even exceeding their original claim amount. These payments are part of the Chapter 11 bankruptcy plan approved in Delaware and represent one of the most efficient recoveries in U.S. financial history, especially considering that most similar cases fail to return even 50% of claims.
The plan administrator, John J. Ray III, emphasized that this distribution is an unprecedented milestone due to the sheer size of the creditor base, which exceeds one million individuals. The key to this recovery has been active asset management, strategic litigation against debtor entities, and the rebound of the crypto market.
A Lesson for the Crypto Ecosystem
While some users complain about not receiving their original cryptocurrencies or benefiting from the recent rise in assets like Bitcoin or Ethereum, cash repayments based on November 2022 prices have proven to be, in many cases, a prudent decision especially for those with smaller balances. For instance, those claiming less than $50,000 received up to 118% of their money back.
This episode, far from sinking the crypto ecosystem, demonstrates its resilience. Although FTX was a severe blow to the sector’s credibility, the organized and transparent response of the recovery team shows that principles of decentralization and financial justice can still be upheld, even after chaos. Looking ahead, this case may serve as a model to improve risk management and user protection within the crypto world.
