FTX is preparing to start repaying claims over $50,000 on May 30, 2023, nearly 27 months after its collapse in November 2022.
The company, led by CEO John Ray III, will use part of its $11.4 billion cash reserve to pay major creditors. Bankruptcy attorney Andrew Dietderich mentioned that FTX is dealing with an overwhelming number of claims, estimated at “27 quintillion,” many of which are considered fraudulent or questionable.
Some creditors, known as “convenience class” creditors, have already received repayments based on the value of their digital assets as of the bankruptcy petition date, November 11, 2022. FTX claims that creditors will receive 118% of their claims back in cash.
However, some creditors believe this figure is misleading. Since the petition date, the prices of many digital assets have surged significantly. For instance, Solana has risen by about 650%, XRP by 450%, and Bitcoin by 500%. Even Ethereum, despite recent struggles, has grown nearly 47%. Creditors will be repaid based on the lower values from the petition date, not the current higher prices.
Sunil Kavuri, a representative of the largest creditor group, expressed that while repayments will provide closure for many affected by FTX’s collapse, the repayment amounts do not reflect the full recovery in crypto terms. Creditors will also earn an additional 9% annual interest on their claims while waiting for repayment.
