FTX Begins Payouts to Creditors Under $50K: Recovery Could Reach $16B

FTX has started repaying creditors today (Tuesday),
beginning with those in the “Convenience Class.” This group includes creditors
with claims of $50,000 or less.

These individuals will receive full repayment along with 9%
annual interest accrued since November 2022. FTX
has partnered with BitGo and Kraken to process the payments. Funds are
expected to reach recipients within one to three business days after
distribution begins.

FTX Starts Creditor Payments Under Reorganization Plan

Eligible creditors must complete KYC verification and submit
tax forms to receive payments. Those who miss the deadline can still qualify
for later distributions.

Creditors with claims exceeding $50,000 will receive
payments starting in the second quarter of 2025. FTX plans to distribute $17
billion in total, with $7 billion allocated for the first phase, CCN reported.

The repayments are part of FTX’s reorganization plan, which
took effect on January 3, 2025. The plan follows a prolonged bankruptcy process
and asset recovery efforts.

Creditor Recovery Estimates Show 123% Return

The FTX Creditor Recovery Summary outlines total claims of
$11.75 billion across various creditor groups. Recovery rates vary, with
secured and customer claims ranging from 100% to 142%. Estimated total
recoveries stand between $14.46 billion and $16.25 billion, resulting in an
overall recovery rate of 123% to 138%.

🚨 BREAKING 🚨FTX has just sent a test transaction of 1 $BTC — repayments are starting today! $16 BILLION is about to re-enter the crypto market. Bullish momentum incoming for Bitcoin & Altcoins! pic.twitter.com/Is6y5DC5dY

— BitBull (@AkaBull_) February 18, 2025

Dotcom and US customer claims show higher recovery rates,
while administrative and secured claims are fully covered. Variations in total
recovery stem from factors such as postpetition interest and remission fund
recoveries. Some claim groups could receive more than their original claims.

If repayments include cryptocurrency and creditors sell
their holdings, it could add selling pressure to the market. However, most
repayments are expected in cash, which may limit the impact on FTX’s native
token, FTT.

This article was written by Tareq Sikder at www.financemagnates.com.
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