FTX is set to begin refunding small creditors on February 18, 2025, marking a significant milestone in its bankruptcy proceedings. Creditors with approved claims of $50,000 or less will receive full repayment, including 9% annual interest from November 11, 2022, the date of FTX's bankruptcy filing. These funds will be distributed through verified BitGo accounts linked to the claimants' registered email addresses.
Analysts estimate that approximately $2.4 billion could re-enter the cryptocurrency market following these repayments. This influx of capital has the potential to inject liquidity into the market, possibly influencing the prices of major cryptocurrencies. However, it's important to note that a portion of the claims, about $3.9 billion, has been acquired by credit funds, which may not reinvest in crypto assets. Additionally, around 33% of the remaining claims are associated with sanctioned countries or individuals lacking proper verification, which could affect the overall impact on the market.
While the repayments may provide a temporary boost in liquidity, the long-term effect on the cryptocurrency market will depend on various factors, including how recipients choose to utilize their refunded assets and broader market conditions.