Key Points
- FTX begins the first round of repayments to creditors, starting with claims under $50,000.
- An estimated $1.2 billion will be distributed, marking a significant recovery from the exchange’s collapse.
FTX has initiated the first phase of repayments to its creditors today in a significant step for those who lost funds in the exchange’s $9 billion collapse. The Bahamian branch of FTX, which was heavily impacted by the company’s downfall in 2022, will start reimbursing users with claims under $50,000.
A tweet from Jack Green, a crypto enthusiast, reveals that the first distribution of FTX repayments will total $1.2 billion. The tweet also highlights that 28.75% of the recipients did not complete KYC, 33.33% are claim buyers who likely won’t invest in crypto, leaving only around $400 million for original holders.
Repayments: A Mixed Bag for Creditors
The repayment process is a victory for some creditors, but not all are rejoicing. The model for repayment values the creditors’ holdings based on the cryptocurrency prices at the time of bankruptcy in November 2022, when Bitcoin was trading around $20,000. Since then, the price has surged by over 390%, leaving some creditors feeling shortchanged.
Magdalena Hristova, a public relations manager at Nexo, emphasizes that this repayment represents not just a return of funds but also a restoration of confidence. However, as only creditors with claims below $50,000 are being reimbursed in this first phase, many users are still waiting for clarity on when they’ll see their money. The impact of these repayments on the broader cryptocurrency market remains uncertain.
Market Impact of the Payout
Alvin Kan, the Chief Operating Officer at Bitget Wallet, suggests that the $1.2 billion payout could positively influence the crypto market. He believes a significant portion might be reinvested into cryptocurrencies, impacting liquidity and prices.
The debate is ongoing among traders and analysts about where the funds will go. A trader known as “hansolar” suggests that some recipients will likely use the money for debt repayments or liquidity needs. He also notes that speculative assets like meme coins and Solana are facing fatigue, while Ethereum has remained relatively stagnant.
AI-related tokens have experienced a 90% drop, reinforcing the trend of retail investors following hype cycles rather than buying during downturns. Given these conditions, Bitcoin is expected to be the biggest beneficiary of the redistributed capital.
