- FTX will repay creditors $14.7-16.5 billion under a Chapter 11 deal.
The company will settle smaller claims under $50,000 within 60 days.
According to court approval, FTX has begun paying back its creditors as part of a Chapter 11 reorganization plan, nearly two years after its collapse in November 2022. On January 3, 2025, FTX initiated the first round of repayments to exchange creditors whose claims are less than $50,000. Crypto firms Kraken and BitGo are handling this initial phase and anticipate completing it within two months.
The reorganization strategy intends to distribute anywhere from $14.7 billion to $16.5 billion among customers and creditors. Incredibly, creditors could potentially receive up to 119% of their reported account value at the time of the cryptocurrency exchange’s downfall, which is positive news for those affected by one of the largest crypto bankruptcies on record.
Later on, the officials will disclose information about their repayment strategy towards creditors who hold larger amounts. Notably, the plan sets November 2022 as the reference point for cryptocurrency valuations. However, some creditors have expressed strong disapproval over this decision due to the significant surge in the value of cryptocurrencies, like Bitcoin, which has increased by more than 500% since then, with Bitcoin seeing a rise alone.
Steps Further in FTX’s Bankruptcy Recovery
The crypto exchange FTX suffered a severe liquidity problem that led to its downfall, and its previous leader, Sam Bankman-Fried, was given a prison term of 25 years for deceitful practices. But there’s speculation the president may grant him clemency because of significant political donations he made in 2020. The conversation around this has been ignited by Elon Musk on Twitter, though no definitive statements have been released so far.
Market analysts are closely monitoring the repayment of FTX since it could potentially increase liquidity within the cryptocurrency market, leading to a price hike. In fact, the total value of all cryptocurrencies has already increased by 2.5% in the past 24 hours, with Bitcoin trading above $98,000.
The report, which outlines convenience class repayments, will also provide information about ongoing discussions with other creditor groups regarding claims. With over $14 billion amassed, the estate aims to invest in extensive repayment initiatives for these creditors as well.
FTX’s repayment plan, demonstrating its transparency and efficiency, serves as an initial step towards full financial recovery. This is the most recent update in the prolonged bankruptcy process, emphasizing the estate’s dedication to fairness and clarity for all users involved.
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2025-01-07 06:57