FTX will initiate the second round of repayments at the end of the month, repaying $5 billion to creditors

After the abrupt collapse of cryptocurrency exchange FTX in November 2022, following a lengthy 27-month bankruptcy process, according to the latest announcement, starting from May 30, the bankrupt entity 'FTX Trading Ltd.' will initiate the second phase of repayment operations, repaying over $5 billion to major creditors.

FTX initiated its first round of repayments on February 18 this year, primarily targeting 'convenience' creditors, i.e., those whose claims do not exceed $50,000.

As for the upcoming second phase of repayment operations, it is aimed at creditors who missed the first round of compensation, as well as large claims from 'non-convenience' creditors.

According to an announcement released on Thursday, the relevant funds will be distributed via BitGo and Kraken, and are expected to be credited within 1 to 3 business days.

FTX had previously stated that creditors would be able to recover 118% of their claims, which seems like an excessive payout. However, the calculation standards for these repayments still cause significant controversy, as the claim amounts are calculated based on the market price on the day of FTX's bankruptcy (November 11, 2022), rather than the current market price, effectively ignoring the price surge over the past two years.

For example, suppose an investor held 1 Bitcoin on the day FTX declared bankruptcy in 2022, which was valued at about $16,500 at the time, while the current market price of Bitcoin is $104,000. However, FTX still calculates the compensation amount at $16,500, meaning the investor directly loses nearly 85% of potential gains.

Despite the controversial repayment method, the market's focus has quietly shifted to the next wave of potential funding momentum.

Market observers believe that FTX's release of $5 billion in funds this time, if part of it returns to the cryptocurrency market, will inevitably become the spark for the next round of market activity.

"FTX will initiate the second round of repayments at the end of the month, repaying $5 billion to creditors" was first published on (Blockke).