FTX Begins $5B Stablecoin Payout, Creditor Recovery and Market Reaction Under the Microscope

Analysts Eye Ripple Effects from Liquidity Injection Amid Crypto's Bullish Shift

FTX has begun distributing more than $5 billion in stablecoins to creditors in the second major phase of its repayment strategy, marking a pivotal moment in one of the most complex insolvency cases in crypto history. The payout, announced on May 30, 2025, is being processed through Kraken and BitGo, with disbursement expected to conclude within one to two business days. 

This follows the initial $1.2 billion repayment executed in February, which largely targeted small retail claimants with balances under $50,000 and included both crypto and fiat elements. This time, the repayment is exclusively in stablecoins—an intentional shift aimed at granting immediate liquidity and optionality for recipients, whether they choose to convert, withdraw, or reinvest.

Breakdowns of the current reimbursement show stark differences in recovery across creditor classes. Dotcom Customer Entitlement Claims are receiving 72% of their claim value, while U.S. Customer Entitlement Claims are getting 54%. General unsecured creditors and digital asset loan holders are seeing 61% returns. The Convenience Class, made up of smaller claims under $50,000, is receiving an outsized 120% of their approved claim value, a resolution tactic designed to simplify the tail-end of the claims process while overcompensating the lowest value claims to avoid prolonged litigation.

Coinbase analysts view the $5 billion injection as more than just a settlement event—they believe it could serve as a tailwind for market activity, especially when contrasted with the muted February response. Their argument centers on the vastly improved macro conditions: Bitcoin recently hit all-time highs, U.S. regulatory ambiguity is easing, and institutional treasury allocations to crypto are on the rise. Back in February, Coinbase's COIN50 Index dropped 16% during the first round of FTX disbursements, as market momentum was undercut by economic uncertainty. This time, with a stronger sentiment backdrop, analysts suggest the effect could be the opposite, potentially lifting prices if a critical mass of creditors reallocates their funds back into the market.

Still, legal rulings continue to stir discontent. In September 2024, a federal court decided that all reimbursements would be calculated based on crypto prices at the time of FTX’s bankruptcy petition in late 2022. Bitcoin was trading at around $16,000 then, compared to over $70,000 today, meaning many creditors will only recoup 10–25% of what their holdings are now worth. Sunil Kavuri, one of the most outspoken creditors in the case, has criticized the process as fundamentally unjust, arguing that the resolution does not reflect crypto’s volatility nor its substantial recovery. According to Kavuri, creditors “are not whole,” and the ruling ignores the nature of digital assets.

Adding to the controversy, FTX's repayment framework excludes residents in 163 jurisdictions due to regulatory or legal limitations. Affected regions include Russia, Egypt, Iran, Pakistan, and Greenland. Critics argue the restrictions unfairly penalize users based on geography rather than conduct, with some international observers citing the exclusions as an example of fractured global crypto governance.

Despite the unresolved frustrations, the scale and structure of this stablecoin-led payout could prove instrumental in reshaping short-term market dynamics. By bypassing traditional fiat and crypto assets in favor of stablecoins, the repayment offers creditors liquid capital at a time of growing institutional interest and clearer regulatory direction. While some may choose to exit the market entirely, analysts suggest that large institutional claimants are likely to reenter with speed, reinforcing price levels or possibly pushing valuations higher. For a market still shadowed by the collapse of FTX in November 2022, this second-phase disbursement may mark a psychological and financial inflection point.

This article has been refined and enhanced by ChatGPT.