FTX, once the second-largest centralized cryptocurrency exchange, is poised to begin repaying over $1.2 billion to users affected by its bankruptcy. After more than two years of uncertainty, users who are owed up to $50,000 in digital assets must fulfill repayment requirements by January 20, marking the start of the first phase of compensation.
According to FTX creditor Sunil, repayments for claims up to $50,000 are expected to begin after the January 20 deadline. This date coincides with U.S. President-elect Donald Trump’s inauguration, sparking expectations of clearer crypto regulation and potential advancements in the Bitcoin Act. This proposed legislation aims to establish a Bitcoin reserve for the U.S., further stirring anticipation of a bullish 2025 crypto market cycle, with some analysts predicting Bitcoin could exceed $200,000.
FTX repayments
— Sunil (FTX Creditor Champion) (@sunil_trades) January 12, 2025
Initial Distribution Schedule
Claims < $50k = $1.2bn
Jan 20th: FTX has given until 20th Jan to fulfil pre distribution requirements for initial distribution
Repayments likely won’t start before then
Feb 25: Likely (up to 4th Mar)
The repayment plan, which was approved in October 2024, outlines that 98% of FTX users could receive 119% of the declared value of their funds. However, concerns have arisen over how the repayments are calculated. Some critics argue that the value of crypto assets will be based on prices at the time of FTX’s bankruptcy in November 2022, when Bitcoin was significantly lower. Since then, Bitcoin has surged by over 370%, raising questions about the fairness of reimbursing claimants based on outdated valuations.
The repayment could also trigger market volatility, with some investors speculating that a portion of the returned funds might flow into other cryptocurrencies. Anndy Lian, a blockchain expert, highlighted the potential for mixed reactions. Drawing parallels to the Mt. Gox case, where creditors held onto their Bitcoin for years, Lian suggested that many FTX users might take a similar approach, holding their assets in anticipation of further market growth.
Also Read: FTX Exposes Backpack’s False Claims of Acquiring FTX EU, Clarifies Customer Repayment Process
As FTX prepares for the distribution, crypto firms like BitGo and Kraken are set to assist in the process. With up to $16 billion in payouts expected, the $1.2 billion initial distribution could create significant liquidity, potentially reshaping the crypto landscape.
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.
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