FTX Bankruptcy Update: $5B Distribution Set for May 30 – Here’s Who Will Get Reimbursed

More than two-and-a-half years after filing for bankruptcy, the FTX estate is set to distribute over $5 billion to a second group of creditors. According to a May 15 announcement by the FTX Recovery Trust, the funds will be released within 1 to 3 business days starting May 30, with BitGo and Kraken facilitating the transactions.

Who Will Receive the Payout?

Under the reorganization plan, the FTX estate has outlined five groups of “convenience classes” that will receive between 54% and 120% of their initial claim value. However, not all account holders will receive reimbursements in this round. The next group of eligible creditors and their payout schedule will be disclosed in due course. The first round of reimbursements, which commenced on February 18, repaid approximately $1.2 billion to creditors. The estate expects to pay up to $16 billion if all claims are filed.

Controversy Over Crypto Valuation

Despite the substantial payout, some former FTX users have criticized the recovery plan for basing disbursements on the crypto prices at the time of bankruptcy in November 2022. Since then, the price of Bitcoin has surged from $20,000 to over $100,000, leaving many creditors feeling shortchanged. Nonetheless, the recovery plan states that 98% of creditors are expected to receive at least 118% of their initial claim value in cash.

Legal Fallout Continues

The FTX estate’s announcement comes after several former FTX executives, including CEO Sam Bankman-Fried and Alameda Research CEO Caroline Ellison, were sentenced to prison for their roles in the misappropriation of customer funds. While Bankman-Fried received a 25-year sentence, Ellison and FTX Digital Markets co-CEO Ryan Salame received two and seven-and-a-half years, respectively. Meanwhile, Salame’s wife, Michelle Bond, faces ongoing campaign finance charges in New York, adding another layer to the FTX saga.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.

Andrew Chen

I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.