The FTX collapse in late 2022 led to a prolonged bear market the cryptocurrency ecosystem took years to recover from. The affected have now started to receive their payouts, with 9% interest per annum calculated from the month of the collapse, yet they’re still getting paid less than expected.
This week, the FTX bankruptcy estate began distributing $1.2 billion to customers whose claims total less than $50,000. This initial tranche represents the first step in a broader repayment plan that could ultimately distribute $16.5 billion. The estate announced plans for a subsequent distribution in May, with support from both BitGo and Kraken.
“We are pleased to commence initial distributions today and set the timeline for our next distribution. FTX appreciates our customers and creditors’ patience and collaboration throughout this complicated process. Our work is not over – we intend to continue our recovery efforts and returning funds to additional claim classes.” John J. Ray III, the CEO of the FTX estate, stated.
The path to this point has been arduous. In the chaotic aftermath of the collapse, the estate’s advisors struggled to ascertain the company’s financial standing, hampered by inadequate record-keeping that Sam Bankman-Fried’s management kept.
Initial estimates suggested only a fraction of customer funds would be recovered, yet things improved as more cryptocurrency holdings were unearthed and after the sale of the company’s stake in AI startup Anthropic, which was valued at $880 million.
FTX Creditors Receive Less Than Hoped
Despite these gains, the repayments come with a caveat. Distributions are calculated based on cryptocurrency prices as of November 11, 2022, the day FTX declared bankruptcy, and are paid in U.S. dollars.
FTX’s collapse was a significant moment in the cryptocurrency bear market, and most cryptocurrencies have seen massive price rallies since. Bitcoin, for example, is up more than 80%, while Solana saw its price explore from a low under the $10 mark to now stand around $170.
