Key Points
- FTX is scheduled to start repaying its creditors on February 18, 2025, with an overall repayment package of $18 billion.
- BitGo, a crypto custodian, is tasked with managing fund distributions according to FTX’s reorganization plan.
FTX’s Repayment Process Begins
FTX is anticipated to commence its repayment process to creditors on February 18, 2025. This marks a significant milestone in the recovery process following its 2025 collapse.
Claims below $50,000 are expected to receive disbursements within three business days. The total repayment package is a whopping $18 billion, but the distribution has been delayed due to legal challenges.
The bankruptcy proceedings have been hindered, especially with the rise in crypto asset values. To offset financial discrepancies caused by these delays, a 9% post-petition interest has been added to creditor claims. This is intended to bridge the financial gap from FTX’s collapse to the repayment period.
Details on Repayment and Role of BitGo
Louis Origny, co-founder of FTXcreditor.com, provided some insights. According to him, smaller account holders will receive 120.5% of their claims back on February 18. Those with claims exceeding $50,000 may receive a higher return – potentially up to 175% – but their repayments are scheduled to begin in Q2 2025.
Crypto custodian BitGo has been assigned to oversee fund distributions following FTX’s reorganization plan, which took effect on January 3, 2025. The plan stipulates that all repayments must be processed within 60 days of this effective date, reassuring many creditors eager to reclaim their lost assets.
There is growing frustration among Bitcoin holders on the platform. The cryptocurrency’s value has skyrocketed to $96,500, nearly five times higher than the $20,000 per BTC repayment cap imposed by FTX. With 98% of Bitcoin holders affected, many view the cap as a missed opportunity to benefit from the sharp price increase.
To raise funds for repayments, FTX has sold 41 million SOL tokens across three auctions. Galaxy Digital emerged as the largest buyer, acquiring 25.52 million SOL at $64 per token. Since FTX’s collapse, Solana’s price has risen significantly, boosting Galaxy’s investment return to 187%.
The second-largest purchase was led by Pantera alongside a group of investors, securing 13.67 million SOL at $95 per token and achieving a 93% gain. Other participants purchased 1.8 million SOL at $102, securing an 80% profit. Proceeds from these transactions have bolstered FTX’s repayment pool, speeding up the distribution process.
FTX’s Collapse and Consequences
FTX’s dramatic collapse in 2022 sparked one of the biggest financial scandals in crypto history. Investigations revealed widespread fraud and mismanagement within the exchange, resulting in criminal charges against its founder, Sam Bankman-Fried, and former executive Caroline Ellison.
In March 2024, a jury found Bankman-Fried guilty of fraud, and US District Judge Lewis Kaplan sentenced him to 25 years in prison. The court determined that he had misappropriated billions of dollars, defrauding FTX investors of over $1.7 billion and Alameda Research lenders of more than $1.3 billion.
The FTX token (FTT) has seen notable price movements amid the upcoming repayments. FTT has risen by 5% today, with a trading volume of $28 million. Over the past seven days, it has climbed 14.40%, indicating strong buying pressure in the market.
