FTX Creditor Reimbursements: An Update on the Latest Disbursement Phase
On May 30th, the FTX Recovery Trust launched its second round of payments to creditors, marking a significant step in the ongoing effort to settle outstanding claims. This phase involves a substantial distribution of approximately $5 billion to eligible claimants who have met all pre-distribution criteria, offering a glimmer of hope for those affected by the exchange’s collapse.
According to an official statement released on May 28th, the distribution will encompass various claim categories, including Digital Asset Claims, Customer Entitlement Claims, and Convenience Claims. Notably, Digital Asset Claims will receive a 72% payout, while US Customer Claims are slated for a 54% recovery. Meanwhile, Convenience Claims are set to be reimbursed at a rate of 120%, reflecting the trust’s effort to prioritize certain creditor groups.
Additional claim types, such as Unsecured Claims and Digital Asset Loan Claims, will each be allocated a 61% distribution. Recipients can expect to see their funds within one to two business days, thanks to the cooperation of distribution partners Kraken and Bitgo, who facilitate the transfer process efficiently.
Market participants, especially crypto investors and traders, are closely monitoring these creditor distributions. The reason is that the influx of liquidity from reimbursements could influence digital asset prices, potentially leading to increased volatility if large sums are sold or exchanged on retail platforms.
Related: Binance Moves to Dismiss $1.76 Billion FTX Lawsuit, Blames SBF for the Collapse
Historical Context: The First Wave of FTX Creditor Payments
The initial round of creditor reimbursements, which targeted claimants with claims under $50,000, was disbursed on February 18th, totaling approximately $1.2 billion. This early payout provided some relief to smaller creditors and marked a pivotal moment in the resolution process.
Alvin Kan, COO of Bitget Wallet, commented at the time that a significant portion of this disbursed amount might be reinvested into the broader crypto ecosystem, potentially fueling further market activity amid ongoing recovery efforts.
Challenges and Controversies Surrounding the Reimbursement Process
The distribution scheme has not been without controversy. Many creditors and industry observers have expressed concerns over the fairness and transparency of the process. In September 2024, Sunil Kavuri, a creditor representative, shared court documents indicating that reimbursements are based on the date claims were filed, rather than current market values.
As a result, many creditors received only 10% to 25% of the value of their holdings, a figure that has disappointed many who expected higher recoveries. Kavuri emphasized that the court’s ruling reflects the reality that, at the time of filing, crypto prices were significantly lower-Bitcoin, for example, was trading around $16,000 during the claim submission period.
Further complicating matters, Kavuri highlighted in February that creditors in 163 countries-including residents of Egypt, Iran, Russia, Greenland, and Pakistan-are ineligible to receive any reimbursements. This geographic restriction has added to the frustration among international claimants, many of whom have been left without compensation despite holding valid claims.
As the FTX saga continues to unfold, the ongoing dispute over fair compensation and the impact on the broader crypto market remains a topic of intense debate among industry insiders and affected investors alike.
