FTX Exchange Begins Repayment of $50K Claims, Aims for Bigger Payouts by May 30
FTX, the now-defunct cryptocurrency exchange, has initiated the repayment process for users with claims valued at $50K or less.
Apparently, approximately $1.2 billion will be distributed in the initial phase among the ‘convenience class’ of claimants via Kraken and BitGo.
As of the current moment, Arjun Sethi, the co-CEO of Kraken, has confirmed that the platform has disbursed funds to 46,000 creditors.
“I am delighted to announce a significant milestone: KrakenFX has successfully executed the first funds distribution from the FTX estate to more than 46,000 creditors.”
Similarly, BitGo has verified that it is in the process of distributing funds, with the amounts expected to reflect within the next 72 hours. Most of the initial round of claims will include approximately 118% in accumulated interest.
It is crucial to note that the reimbursements will be made in USD rather than through assets like cryptocurrencies that were held by victims at the time of FTX’s bankruptcy filing.
Furthermore, the compensation will be calculated based on the assets’ values as of November 2022. During the crypto winter of 2022, Solana [SOL] was priced at around $8, BTC hovered around $16,000, and ETH was trading at approximately $1,200.
Anticipated Larger Claims Development in May
The subsequent phase covering claims exceeding $50K is expected to be conducted in stages. According to the most recent update issued by the liquidators, the second phase of repayments may commence on May 30th.
In response to the ongoing process, John J. Ray III, the FTX Recovery Trust administrator, expressed,
“We take pleasure in kickstarting the initial disbursements today and establishing the timetable for the upcoming round of distributions… Our efforts are not yet complete – we are committed to pursuing our recovery endeavors and returning funds to additional claim groups.”
An estimated $16 billion to $17 billion is projected to be allocated to FTX creditors by the conclusion of the initiative.
This scenario will signify three years since FTX’s insolvency following misappropriation of user funds by its founder, Sam Bankman Fried.
In a similar gesture of goodwill, Binance’s founder, CZ, vowed to contribute to users who suffered losses from TST and Broccoli memecoins. Nevertheless, he clarified that this act does not signify an endorsement of the tokens.
“I will donate it, most likely to individuals who incurred losses on TST or some of the Broccolis. This should NOT be interpreted as an endorsement for any of the tokens.”
On another note, the FTT token, FTX’s native token, was valued at $2. It experienced a 5% decline on that day amidst general market bearishness.