- FTX's repayment may put almost $17 billion back into creditors’ pockets.
- Creditors will receive an in-cash settlement for their crypto value when FTX crashes.
- Repayment will close out the two-year FTX bankruptcy saga.
The FTX bankruptcy saga that blew up the crypto industry two years ago — landing key figures including founder Sam Bankman-Fried in jail — is almost over.
A Delaware bankruptcy judge on Monday approved a plan to begin repaying customers who lost money in the collapse.
The approved compensation package will see FTX creditors receive up to $16.5 billion in cash compensation for their losses.
Here’s when and how they’ll get their money back.
Scant consolation
Almost all affected users will receive about 119% of the cash value of their deposits from two years ago, according to the repayment plan.
Still, some FTX customers who lost their crypto deposits when the exchange collapsed remain unhappy.
That’s because the repayment recognises the value of their crypto holdings on FTX when the exchange collapsed. Bitcoin and Ethereum traded at $20,000 and $1,200 when FTX crumbled.
Today, they’ve risen to $65,000 and $2,400, respectively.
Creditors who held Solana on FTX are even bigger losers. Solana is up seven-fold since its market crash during the FTX fiasco.
Some customers complain that they’ve lost out on the gains their crypto investments could’ve made in the last two years.
The only creditors likely to be left unscathed are those with stablecoin deposits, since their value is hard-pegged to the dollar.
Effective date
With the judge’s ruling on Monday, creditors are awaiting the effective date for FTX’s creditor repayment plan.
The date kickstarts the clock for the disbursement of funds to affected customers.
Given FTX’s global reach during its heyday, the repayment plan covers creditors in several countries.
That complicates the process.
“The estate is working to finalise arrangements to make distributions to creditors across more than 200 jurisdictions around the world,” John Ray, FTX’s CEO and restructuring chief, said in a statement on Monday.
Once the effective date for the payment plan has been announced, repayments to creditors must happen within 60 days, based on Monday’s ruling.
Customer claims
The FTX claims website has yet to be updated to show payout options for creditors.
Approved creditors have previously filed claims during the bankruptcy process.
Those creditors have provided customer identification documents and reviewed their FTX balances as of the time the exchange went down.
Some account owners have also previously submitted tax forms for the claims filing process.
The repayment funds come from money realised from the liquidation of FTX assets, including the $900 million sale of its stake in the Amazon-backed AI startup Anthropic.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.
