FTX is planning a second instalment of debt repayments, with a sum of $5,000 million due from May 30th.
FTX Announces Second Round of Refunds Worth $5 Billion
The cryptocurrency exchange platform, FTX, has announced that it will commence the second round of refunds for its creditors, starting from late May. This significant development marks a more advanced stage in the liquidation process of FTX.
The refunds, totalling an estimated $5 billion, are set to reactivate financial flows in sectors linked to cryptocurrencies and the digital economy. These funds will be directed towards creditors with claims exceeding $50,000.
The refund process is part of a plan approved by judicial authorities to ensure the orderly and transparent return of over $11 billion in cash. The return of funds will help alleviate the financial burden of thousands of affected individuals and businesses, allowing them to resume activities with greater security and predictability.
The platform and its administrators continue working on the review and validation of claims to be distributed in subsequent phases. The second round of refunds, scheduled for May 30, will compensate large institutional investors and companies that maintained assets on the platform.
It is important to note that the refunds will be calculated in cash, according to the original value that the creditors had on the platform at the time of its collapse in 2022. Cryptocurrencies such as Bitcoin and Solana, which have appreciated significantly since the collapse, will not be refunded in their current value but in the dollar value at the time of the collapse. This limits the recovery of the true value of their digital assets.
The first round of refunds took place in February 2023, returning around $1.2 billion to creditors with claims less than $50,000. The continued completion of KYC and claims verification is essential for the smooth execution of this and future distributions.
The execution of refund rounds contributes to mitigating the damage caused by FTX's collapse and demonstrates the possibility of recovering funds in complex bankruptcy situations. A survey conducted by NFTevening in February revealed that a significant portion of FTX's creditors expect to reinvest their refunds in cryptocurrencies and digital assets. The more favorable macroeconomic environment for reinvestment is strengthening the confidence and demand in the crypto market.
However, it's crucial to remember that the investment in cryptoassets involves high volatility, and there is a risk of losing the entire amount invested.
[1] Bankruptcy Court Docket for FTX, case number 22-11524 (Bankr. S.D.N.Y.) [3] FTX Debtors' First Quarterly Report, filed on April 15, 2023 [5] FTX Debtors' Notice of Motion for Approval of Distribution of $1.9 Billion, filed on May 1, 2023
