Bitcoin News Today: FTX Creditors Win in Dollars, Lose in Crypto as Market Surges

FTX Creditors Face Double Loss as Crypto Rally Undermines Dollar Repayments

Creditors of the collapsed FTX exchange are confronting a paradox, as a Yahoo Finance report explains: while cash repayments under the 2025 bankruptcy process have exceeded 100% of their claims in fiat terms, rising crypto prices have eroded the real value of their holdings, leaving many with recovery rates as low as 9% in actual cryptocurrency. The FTX Recovery Trust, which has distributed over $7 billion in assets, according to a Coinotag report, faces criticism for valuing claims based on November 2022 prices, when Bitcoin traded at $16,871 and Ethereum at $1,230—levels that now seem quaint amid today's $110,000 BTC and $4,000 ETH.

Sunil Kavuri, a leading creditor representative, emphasized that the 143% nominal payout translates to just 22% of current Bitcoin's value and 46% for Ethereum, while Solana holders recover a mere 12%, as Cryptopolitan reports. "FTX creditors are not whole," he wrote on X, noting that the trust's approach locks in losses by fixing repayments in USD rather than volatile assets. This method, mandated by U.S. bankruptcy law to simplify distributions, has drawn ire from those who argue it disadvantages creditors in a booming market.

Sam Bankman-Fried, the disgraced founder serving a 25-year prison sentence, has defended FTX's solvency, claiming the exchange "was never bankrupt," according to a Coinpedia report, and that customers could have been repaid earlier to avoid the price surge. His legal team, however, faces an uphill battle in their November 4 appeal, which challenges his conviction on fraud charges. Meanwhile, the FTX estate maintains that its dollar-based approach adheres to legal standards, ensuring equitable distribution amid crypto's volatility.

The situation has also sparked a wave of scams targeting creditors, with fraudsters impersonating airdrop projects to extract sensitive information. Kavuri warned that while initiatives like Paradex have distributed tokens to FTX victims, creditors must remain vigilant against fake offers, as a Bitcoinsistemi article notes.

Despite these challenges, the recovery process has achieved notable milestones. Over 98% of creditors have received partial payouts, with convenience claims fully satisfied at 120%. The trust plans a $1.6 billion distribution later this year, building on a $5 billion payout in May that covered 72% of Dotcom claims and 54% of U.S. customer entitlements. General unsecured and digital asset loan claims are set to receive 61% of their value through platforms like Kraken and BitGo, according to a Markets.com piece.

Industry observers highlight the broader implications for crypto regulation, as the FTX case underscores the complexities of valuing digital assets in bankruptcy. While the trust's strategy prioritizes legal compliance and administrative efficiency, it has exposed tensions between fiat-centric frameworks and the dynamic nature of crypto markets.

As the crypto rally continues, creditors remain divided: some view the payouts as a lifeline, while others see them as a Pyrrhic victory. For now, the focus shifts to upcoming distributions and the outcome of SBF's appeal—a case that could reshape how crypto insolvencies are handled in the future.