FTX Digital Markets is set to begin repaying $1.2 billion to its creditors, marking the first major distribution since the exchange collapsed in 2022. Payments will start with priority given to creditors with claims under $50,000. This is part of the ongoing bankruptcy process following FTX’s downfall, which resulted in an estimated $9 billion in losses across the industry.
Repayments are calculated based on cryptocurrency prices from November 2022, when Bitcoin was valued at around $20,000. Since then, Bitcoin has surged over 390%, frustrating many creditors who argue that the payout does not reflect the current market value of their assets. Despite this, the distribution could notably impact market liquidity, with some analysts speculating that a portion of the repaid funds may flow back into crypto investments.
According to FTX creditor Sunil, who is part of the exchange’s largest creditor group, over 1,500 claimants will receive payments in this initial round. However, larger creditors are still waiting for updates on their claims, and it remains unclear when they will be reimbursed. The repayment process is being closely watched as a crucial step in FTX’s bankruptcy proceedings and the broader recovery of the cryptocurrency market.
Some experts believe the repayments may only minimally affect crypto prices. While a $1.2 billion injection could boost liquidity, many recipients may use the funds for personal financial recovery rather than reinvesting in digital assets. Nexo’s public relations manager Magdalena Hristova stated that, beyond financial compensation, these repayments could help restore confidence in the industry. She noted that retail investors, especially those without diversified holdings, will see this as a sign of stability after the chaos caused by FTX’s collapse.
Bitget Wallet’s Chief Operating Officer, Alvin Kan, pointed out that while some repaid funds might return to the market, it is difficult to predict the broader impact. He emphasized that the repayment process is significant both in terms of capital movement and investor sentiment. Traders are split on how the funds will be used, with some expecting Bitcoin to benefit the most, while others believe recipients will prioritize debt repayment or other financial needs over speculative investments.
The collapse of FTX and its network of over 130 subsidiaries led to one of the harshest crypto downturns in history, with Bitcoin’s price dropping as low as $16,000. While the repayment process represents a significant milestone, not all creditors are seeing relief yet. Many larger claims remain unresolved, and the long-term impact on the market depends on how recipients choose to use their recovered funds and whether future repayments proceed smoothly.
