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FTX's Recovery Plan: $5.4 Billion Payouts to Creditors Underway

The bankrupt crypto exchange FTX is set to distribute $5.4 billion to its creditors by the end of the month.

Eligible claimants will receive their funds via BitGo or Kraken within 1-3 business days following May 30th.

This payout will utilize part of FTX's $11.4 billion cash reserves, with future distributions expected to be detailed at a later date.

FTX's primary creditors include large individual and institutional holders who had significant balances on the platform prior to its downfall.

Conversely, smaller creditors categorized under the “Convenience Class” began receiving their shares as early as February.

In October, a US bankruptcy court authorized FTX to disburse between $14.7 billion and $16.5 billion to affected former customers.

Under this restructuring plan, around 98% of creditors are anticipated to reclaim roughly 119% of their holdings based on the value at the time of the exchange's bankruptcy filing in November 2022.

These increased payouts are attributed to the rising prices of cryptocurrencies and FTX's stake in the AI safety firm Anthropic.

FTX's collapse was primarily due to allegations that its CEO, Sam Bankman-Fried, mismanaged funds by lending customer deposits to his trading firm, Alameda Research.

As the situation continues to evolve, stakeholders remain hopeful for a positive outcome in the restructuring efforts.