The Bankrupt Crypto Exchange FTX to Begin Paying Main Creditors in May

Overview

The bankrupt crypto exchange FTX is reportedly set to start paying its main group of creditors at the end of May. Business restructuring lawyer Andrew Dietderich mentioned in court last week that the payouts are scheduled to begin on May 30th, according to a report by Bloomberg.

Reimbursement Process

FTX will utilize its $11.4 billion cash reserves, amassed post the crypto exchange’s collapse, to reimburse major creditors. The main creditors are categorized as individuals and institutions who had substantial sums deposited in the platform prior to its downfall. Meanwhile, smaller creditors in FTX’s “Convenience Class” began receiving distributions in February, as per a press release from the exchange.

Approved Plan

In October, a US bankruptcy court approved FTX’s plan to distribute between $14.7 billion and $16.5 billion in payouts to the crypto exchange’s former customers. The plan aims for 98% of the exchange’s creditors to receive around 119% of the value of their holdings on the day FTX filed for bankruptcy in November 2022. The enhanced payouts are attributed to crypto prices and FTX’s 8% stake in the AI safety and research company Anthropic.

Background

FTX faced bankruptcy amidst allegations that its then-CEO, Sam Bankman-Fried, mismanaged the exchange’s funds by lending out billions of dollars worth of customer deposits to Alameda Research, the firm’s trading arm.

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