Creditors of the defunct cryptocurrency exchange FTX are finally starting to see some light at the end of the tunnel as they receive their initial payouts in their Kraken accounts. This marks a significant milestone in the ongoing bankruptcy proceedings of the company.
Those who had approved claims under $50,000 are receiving full reimbursements, along with 9% annual interest that has accrued since FTX filed for Chapter 11 bankruptcy back in November 2022. Some screenshots shared online even show that some creditors are receiving amounts that exceed their original claims, thanks to the interest accumulated over the past two years.
Arkham Intelligence, a blockchain analytics firm, has confirmed that there have been significant outflows from FTX-controlled wallets, with around $1.2 billion being distributed in this first phase. As per the court-approved bankruptcy plan, creditors in this category are set to receive approximately 119% of their adjudicated claim value.
For larger creditors with claims exceeding $50,000, their payments are scheduled to begin in the second quarter of 2025, with a total of roughly $16 billion earmarked for distributions. These repayments, which are being made in US dollars, are being facilitated through BitGo and Kraken. Some recipients have noted that Kraken is providing trading fee credits alongside the deposits, ensuring a smooth fund distribution process without the exchange profiting from it.
The collapse of FTX in November 2022 was a result of widespread financial mismanagement, missing customer funds, and alleged fraud by its leadership. This led to a complex legal battle that ultimately saw founder Sam Bankman-Fried criminally convicted in 2023. Since then, the bankruptcy process has been focused on asset recovery and creditor repayment, with FTX’s estate liquidating holdings, selling assets, and reaching settlements to amass funds for distributions.
Legal filings indicate that the estate has managed to recover more assets than initially anticipated, allowing it to fully compensate smaller creditors and provide significant returns to larger claimants. While the current distributions represent a positive step forward, some creditors have voiced frustration over the repayment timeline, especially those with claims above the $50,000 threshold who will have to wait several months for their share of the remaining $16 billion in funds.
Overall, the progress in the repayment efforts of FTX’s creditors is a positive development in a challenging situation, offering hope to those affected by the exchange’s collapse.