FTX, the cryptocurrency exchange that faced a collapse under the leadership of Sam Bankman-Fried, is now gearing up to repay its main creditors starting at the end of May. According to reports from Bloomberg, the company has managed to accumulate $11.4 billion in cash to distribute among the thousands of parties impacted by its bankruptcy in 2022. The first round of payments to major creditors is scheduled for May 30.
These major creditors include institutional investors and firms that had holdings in cryptocurrency on FTX’s platform. Smaller creditors with claims below $50,000 have already begun receiving their distributions. However, the process of unwinding FTX’s balance sheet has been hindered by a large number of claims, with many being deemed as questionable. Andrew Dietderich, a bankruptcy attorney for the firm, revealed that FTX has received an overwhelming number of claims, some of which are duplicates or even fraudulent.
The delay in payments is further compounded by the fact that legitimate creditors are entitled to 9% annual interest on unpaid claims. With the price of bitcoin surging more than fourfold since the bankruptcy, the urgency to settle these claims has increased. While FTX is only earning a modest return on its cash, the longer it takes to pay out these claims, the more the company could potentially owe in interest.
The frustrations among creditors waiting to be repaid in crypto, not dollars, have only intensified as the process drags on. The collapse of FTX has left a financial void in the cryptocurrency market, and the resolution of these outstanding claims is crucial for restoring trust and stability in the industry. As the company moves forward with its repayment plan, the hope is that it can fulfill its obligations in a timely manner and alleviate the concerns of those impacted by its downfall.