FTX Begins Repaying Creditors: $1.2 Billion Distributed, More to Come

The estate of collapsed crypto exchange FTX has initiated a creditor repayment program, distributing over $1.2 billion to smaller claim holders on Tuesday. This marks a significant step in the exchange's efforts to help former customers recoup their funds. The initial distribution targeted "Convenience Class" claims under $50,000, reaching the majority of affected users. The estate's managers will be sending payments in stages to ensure proper verification and orderly distribution, according to FTX.

In October, FTX's bankruptcy estate announced that creditors and customers would likely receive between $14.5 billion to $16.3 billion in total compensation. Several hundred thousand investors who had money on the exchange filed claims in the aftermath of its chapter 11 bankruptcy protection filing. FTX used client funds for its hedge fund, Alameda Research, and the exchange's founder, Sam Bankman-Fried, was found guilty of defrauding customers in November 2023.

Not all creditors will receive immediate compensation from the estate if they are larger than $50,000 or facing review, among other reasons. Some claimants have been unable to prove that they are eligible for recouping their assets. The estate plans additional "catch-up" payments in Q2 2025.

While the repayment plan has brought some relief to creditors, many remain dissatisfied. Julian Grigo, head of institutions and fintech at asset custody protocol Safe, told Decrypt that most users will recover only a fraction of their original holdings. Reimbursements will be based on asset prices at the time of FTX's collapse, which has sparked debate among creditors about fair value determination in bankruptcy proceedings.

Bitcoin-denominated claims face particular scrutiny, as the repayments, sent out in fiat equivalents, are calculated using November 2022 valuations when the largest cryptocurrency by market value was trading at roughly $20,000. BTC is currently priced around $95,000, and set a new all-time high price of nearly $109,000 in January. Those who hold assets such as Solana will face even steeper losses.

Part of the estate’s distribution strategy has involved the selloff of FTX's SOL. In three auctions running up to April 2024, the