FTX Fund Recovery: Current Status, Market Implications, and Controversial Issues

Summary of key points

Starting February 18, 2025, the bankrupt crypto exchange FTX began paying $1.2 billion to the first group of creditors whose claims do not exceed $50,000. This step is part of a large-scale recovery plan totaling $16 billion, approved by the Delaware court in October 2024. Despite positive signals for the market, the methodology for calculating payments based on November 2022 prices has faced criticism, as the current value of Bitcoin ($98,000) and Ethereum ($2,698) significantly exceeds levels during the bankruptcy period. Experts predict partial reinvestment of returned funds into crypto assets, which may enhance liquidity, but risks of regulatory and legal complications remain.

The history of FTX's bankruptcy and recovery plan

Causes of the crisis and legal consequences

The collapse of FTX in November 2022, caused by the manipulation of client funds and unsecured loans, led to a chain reaction of bankruptcies in the industry. The exchange's founder, Sam Bankman-Fried, received a 25-year prison sentence, and other executives, including Caroline Ellison and Ryan Salame, were also convicted. The fate of Nishad Singh and Gary Wang remains a subject of disputes.

Administrator John J. Ray III, appointed to manage the bankruptcy process, has raised $16.3 billion through asset sales, including stakes in Ventures, Anthropic, and crypto holdings. This exceeds the total debt to creditors ($11 billion), theoretically allowing for a return of 118-119% of the claimed amounts.

Payment mechanism: structure and criticism

Prioritization and technical implementation

The first wave of payments is directed to 162,000 "Convenience Class" creditors with claims up to $50,000, accounting for about 35% of the total number of affected parties (460,000). Transactions are processed through BitGo and Kraken, ensuring compliance with security standards. Subsequent tranches are scheduled for April 11 and beyond, expanding to major investors.

Disputes over asset valuation

The key conflict relates to the use of November 2022 prices:

Bitcoin: $16,000 → $98,000 (+512%)

Ethereum: $1,200 → $2,698 (+125%).

Lawyers, including Sunil Kavoury, insist on the return of crypto assets "in kind," rather than their dollar equivalent. This would allow creditors to benefit from market growth, but contradicts the principles of U.S. bankruptcy law. The SEC supports the current model, fearing legal precedents.

Market implications and forecasts

Short-term effects

On February 18, 2025, the day of the first payments, Bitcoin rose by $2,000 and Ethereum by $150 within an hour, while volumes on Binance and Coinbase increased by 20%. However, analysts from Nexo and Bitget Wallet note that $1.2 billion is only 7.3% of the total plan, which limits the macro effect.

Long-term scenarios

Optimistic: Reinvesting 60-70% of returned funds into the crypto market (≈$720-840 million) will increase buying pressure, especially on altcoins.

Skeptical: Profit-taking and transferring to traditional assets will reduce impact. Critics point to a psychological barrier due to "missed opportunities."

Alvin Kan (COO, Bitget Wallet) emphasizes: "Payments restore trust, but do not compensate for market opportunities in 2023-2024."

Regulatory challenges and FTX's future

SEC intervention and legal risks

The Securities Commission challenges the use of stablecoins for payments, requiring additional checks. This may delay transactions for the remaining 298,000 creditors. Coinbase's Chief Legal Officer, Paul Grewal, criticizes the SEC's approach as "stifling innovation."

Prospects for full debt repayment

With the current schedule, 98% of creditors will receive payments by the end of 2025, however, disputing 12% of claims may extend the process until 2028. AI agents are already spreading misinformation about timelines, causing confusion among investors.

Conclusion: Lessons for the industry

The FTX case highlighted the need for:

Clear standards for client asset accounting.

Deposit insurance mechanisms.

Harmonization of international regulatory practices.

Although the fund recovery has become a historical precedent, the mixed market reaction reflects the depth of systemic issues. Further developments depend on the synchronization of legal decisions and the restoration of retail investor confidence.