FTX Repayments Begin: A Glimmer of Hope for Crypto's Wounded

The collapse of FTX, once a major player in the crypto industry, sent shockwaves through the community and left many creditors with significant financial losses. As repayments to creditors began on Feb. 18, the process marked a turning point in the saga that had shaken the crypto world to its core.

For those who lost up to $50,000, known as the "Convenience Class," the start of repayments brought some relief. These creditors are expected to receive 100% of their claim amount plus 9% interest per annum, based on the value of their holdings on Nov. 11, 2022, the day FTX declared bankruptcy. However, the financial damage was not the only consequence of the exchange's collapse. Many creditors saw their life savings vanish overnight, with plans for home purchases and children's education suddenly derailed. The emotional toll was immense, with reports of depression, suicidal thoughts, and panic attacks among those affected.

The collapse of FTX also highlighted the challenges faced by centralized crypto exchanges and triggered a shift in the regulatory landscape for crypto firms in the US. As the industry grappled with tighter regulations, many creditors found themselves in limbo, searching for liquidity and facing uncertainty in the initial months following the exchange's collapse. Some creditors decided to sell their claims, with over 10,000 claims listed on marketplaces by the end of 2022. The community played a crucial role in supporting those navigating the complex bankruptcy process and providing guidance on legal proceedings.

The legal team and estate management of FTX also became a contentious issue, with disputes over legal fees and the form of reimbursement. Law firm Sullivan & Cromwell netted at least $215 million as debtors' counsel to FTX, charging over $10 million monthly until February 2024. The debate over whether reimbursement should be in crypto tokens or fiat currency also sparked heated discussions, given the rebound in crypto prices since the bankruptcy.

As repayments continue, many creditors are left to reflect on the lessons learned from the FTX collapse. Self-custody is now seen as the only surefire way to ensure property rights are upheld, as centralized exchange operational structures with hot wallets create counterparty risks. While some creditors plan to resume investing in digital assets, others remain fearful of