The FTX Creditors’ group, represented by Sunil Kavuri, recently disclosed that the bankrupt crypto exchange is exploring options to compensate creditors in various countries, including Russia, China, Egypt, Nigeria, and Ukraine.
Kavuri highlighted that creditors from these regions are currently being left out of the ongoing distributions, despite comprising a significant portion of FTX’s user base. Data on the distribution of creditors from the bankrupt exchange indicates that China holds the largest share, accounting for 8% of total claims.
While the reasons for excluding these creditors were not specified by Kavuri, he indicated that FTX’s management is actively working on potential solutions to address the issue. This statement provides some clarity to affected users who have been eagerly awaiting reimbursements.
FTX initiated its first round of payments to smaller creditors on February 18. However, customers in restricted countries, including those mentioned above, are still awaiting their funds, with no official timeline provided for the resolution of their claims.
The exclusion of these countries from the distribution process is not entirely surprising, given that the designated distribution platforms, Kraken and BitGo, are unavailable in most of these regions. However, Kavuri noted that some Egyptian creditors who hold accounts with Kraken and BitGo are still ineligible for payments, indicating that other factors may be contributing to the delay.
In terms of repayment progress, Kraken co-CEO Arjun Sethi confirmed on February 19 that the exchange had successfully processed the initial round of FTX creditor payments, with over 46,000 claimants receiving funds. Sethi emphasized the importance of accountability, security, and transparency in the crypto industry, highlighting the measures taken by Kraken to provide proof of reserves.
FTX has prioritized smaller creditors, fully reimbursing those with approved claims under $50,000 and providing 9% annual interest accrued since the company filed for Chapter 11 bankruptcy in November 2022. Larger creditors with claims exceeding $50,000 are expected to begin receiving payments in the second quarter of this year.
FTX’s collapse in November 2022 following allegations of financial misconduct and fraud led to former CEO Sam Bankman-Fried being sentenced to 25 years in prison. Despite maintaining that FTX was not insolvent but faced liquidity challenges at the time of its bankruptcy, the exchange continues to navigate the complexities of creditor compensation across multiple countries.