FTX has initiated the repayment process for creditors, focusing first on those in the “Convenience Class,” which consists of individuals with claims of $50,000 or less. These creditors will receive their full repayments, supplemented with an annual interest of 9% accrued since November 2022. To facilitate the payments, FTX has teamed up with BitGo and Kraken, ensuring that funds are expected to reach the recipients within one to three business days following the initiation of distributions.
In order to receive these payments, eligible creditors must complete Know Your Customer (KYC) verification and submit the necessary tax documentation. Those who do not meet the initial deadline will still have the opportunity to receive distributions in subsequent rounds.
For creditors with claims that exceed $50,000, repayments are scheduled to commence in the second quarter of 2025. The overall plan involves distributing a total of $17 billion, with $7 billion earmarked for this first phase.
The repayments are part of a broader reorganization plan that took effect on January 3, 2025, following an extended bankruptcy process and efforts to recover assets. The creditor recovery summary indicates total claims amounting to approximately $11.75 billion across various groups of creditors. Recovery rates differ among these groups; secured and customer claims have a recovery range from 100% to 142%. Overall, total recoveries are estimated to be between $14.46 billion and $16.25 billion, translating to an overall recovery rate of approximately 123% to 138%.
Recent communications have also indicated that a test transaction of 1 Bitcoin (BTC) has been successfully conducted, marking the official commencement of repayments. This could lead to around $16 billion being reintroduced into the cryptocurrency market, fostering bullish momentum for Bitcoin and various altcoins.
Recovery rates appear to be particularly favorable for claims from dotcom and U.S. customers, with these groups showing higher return percentages. On the other hand, administrative and secured claims are ensured to be fully covered. Disparities in the overall recovery rates can be attributed to factors such as postpetition interest and recoveries from remission funds, with certain claim groups positioned to receive amounts exceeding their original claims.
Should the repayments feature cryptocurrency, there may be selling pressure emanating from creditors liquidating their holdings. However, the majority of repayments are anticipated to be processed in cash, which could mitigate the impact on the FTX native token, FTT.