Creditors of the defunct crypto exchange FTX have begun receiving their initial payouts in their Kraken accounts, marking a major milestone in the company’s ongoing bankruptcy proceedings.
Claimants whose approved amounts are less than $50,000 receive full reimbursement plus 9% of the annual interest that has accrued ever since FTX entered Chapter 11 bankruptcy on November 20, 2022.
Some screenshots posted online reveal that creditors were paid more than their initial claims. This is due to interest which has accumulated for over two years.
Initial disbursements
Arkham Intelligence, a blockchain analytics company, confirmed that FTX wallets were receiving significant amounts of money. They estimate around $1.2 billion in the first phase.
According to the bankruptcy plan approved by the court, creditors in this category receive 119% of what they are adjudicated for.
Larger creditors — those with claims exceeding $50,000 — are set to begin receiving payments in the second quarter of 2025, with roughly $16 billion earmarked for total distributions.
BitGo, Kraken and other exchanges are handling the US dollar repayments. Kraken offered trading fee credits to recipients in addition the the deposit, which was viewed as a means to guarantee smooth distribution of funds without the exchange making profits.
Collapsed and repayment efforts
FTX collapsed in November of 2022 after revelations about widespread financial mismanagement. Missing customer funds and alleged fraud were orchestrated by the leadership.
The company’s downfall left billions in assets frozen, triggering a complex legal battle that culminated in the criminal conviction of founder Sam Bankman-Fried in 2023.
Since then, the bankruptcy process has focused on asset recovery and creditor repayment, with FTX’s estate liquidating holdings, selling assets, and reaching settlements to amass funds for distributions.
The estate’s legal documents suggest it recovered more than originally anticipated. It was able to pay out smaller creditors in full and to provide substantial returns to the larger claimants.
While this is a significant step in the right direction, many creditors are frustrated with the time frame for the distribution of funds. Those who claim more than $50,000 must wait up to six months before they receive their money.
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