FTX is poised to begin reimbursing claims over $50,000 starting May 30, nearly 27 months after its spectacular collapse in November 2022, marking a significant milestone in its contentious bankruptcy process.
According to bankruptcy attorney Andrew Dietderich, the exchange, now under the leadership of CEO John Ray III, will begin making the first repayments to major creditors from its reserve of $11.4 billion in cash. Dietderich also noted that the defunct exchange is facing “27 quintillion” claims, with a substantial portion of them being fraudulent or questionable, according to Bloomberg.
While some “convenience class” creditors have already been repaid based on digital asset values as of the bankruptcy filing date in November 2022, concerns remain. FTX has projected that creditors will receive 118% of their claims in cash.
However, many creditors argue that this figure is misleading, as it doesn’t account for the price increases of various digital assets since the filing. Over the past two years, tokens like Solana have surged by approximately 650%, XRP by 450%, and Bitcoin by 500%, while Ethereum has grown by nearly 47%. Despite these increases, repayments will be based on the value of assets at the time of the bankruptcy filing.
Sunil Kavuri, representing the largest creditor group, stated that while the repayments will offer closure to those affected, the value is calculated based on the petition date prices, meaning creditors won’t fully recover in current crypto terms. Creditors will also accrue an additional 9% annual rate on their claims during the waiting period. However, the process could take several months, putting FTX under pressure to complete the repayments in a timely manner.
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