FTX, the bankrupt cryptocurrency exchange, announced Wednesday that it anticipates commencing the next distribution of creditor claims on September 30, with a record date for eligible claim holders set for August 15. This latest update also revealed a significant win for creditors, as the bankruptcy court has approved a reduction in the claims reserve from $6.5 billion to $4.3 billion, effectively releasing $1.9 billion for distribution in this upcoming phase.
While the exact amount to be disbursed on September 30 was not explicitly stated, the newly freed funds will substantially bolster the next payout. To date, FTX has distributed approximately $6.2 billion to former customers across two previous disbursements: $1.2 billion in February and $5 billion in May of this year. The overarching repayment plan aims to return between $14.7 billion and $16.5 billion to creditors, with recovery rates varying based on claim type and valuation.
Approximately 98% of creditors are projected to receive at least 119% of their claims based on the value at the time of FTX’s bankruptcy in 2022. This prospect of substantial recovery has been met with some criticism from certain creditors, who argue that the overall crypto market has significantly appreciated since the collapse, leading to a de facto lower recovery in real terms compared to current market values.
The upcoming payouts are expected to be facilitated through established cryptocurrency custodians and payment processors, including BitGo, Kraken, and Payoneer. Traders and market observers anticipate that these significant distributions could inject substantial liquidity into the broader crypto market, particularly for altcoins.
In related developments, the FTX Recovery Trust recently faced a setback regarding its proposed measures for assessing creditor claim distributions in restricted jurisdictions overseas. A motion submitted on July 4 sought to immediately forfeit claims in countries designated as “restricted jurisdictions” where distributions would be deemed illegal, potentially impacting creditors in nations such as China, Russia, Saudi Arabia, and Pakistan.
However, at a court hearing on Tuesday, objections to this proposal were acknowledged. The court subsequently ordered FTX to revise its motion, specifically removing the clause that would allow for the “immediate” forfeiture of claims. Furthermore, the court mandated the inclusion of an option for creditors in these restricted regions to transfer and receive their claims through a different jurisdiction, offering a pathway for recovery that addresses prior concerns.
