FTX Begins Creditor Repayments as Crypto Market Reacts

Market Uncertainty Surrounds FTX's Long-Awaited Repayment Process

Three years after its dramatic collapse, FTX has officially begun repaying creditors, distributing the first phase of what is expected to be a total $13 billion repayment. At precisely 10 a.m. Eastern Time on February 18, 2025, the FTX estate initiated payments, starting with smaller claims of $50,000 or less. 

This initial wave prioritizes approximately 162,000 claimants out of an estimated 460,000, marking a critical step in one of the most high-profile bankruptcy cases in the cryptocurrency industry. The first phase will see $1.2 billion distributed, with $800 million allocated for immediate payout. However, roughly half of the total repayment funds are being withheld to address disputed claims.

The repayment process follows the approval of FTX’s reorganization plan in October 2024 by a U.S. bankruptcy judge. The estate has partnered with BitGo and Kraken to facilitate payments, offering creditors the option to receive funds in stablecoins. 

Notably, Bahamas-based users are among the first to receive payments, aligning with prior legal rulings regarding FTX’s international obligations. While the first distribution marks progress for those impacted by the exchange’s downfall, many creditors remain frustrated by the valuation of their claims, which are based on November 2022 prices—when Bitcoin was trading at significantly lower levels than its current valuation. 

Since FTX’s collapse, BTC has surged nearly 500%, leaving creditors with substantially lower payouts compared to the potential gains they could have realized had they been able to access their funds sooner.

The market’s response to the repayment announcement has been mixed, with some investors speculating that the distribution of funds could result in fresh capital entering the crypto market, while others remain skeptical about any significant price impact.

Bitcoin briefly dropped below $95,000 following the news, despite reaching multiple all-time highs in recent weeks. Solana also saw a decline, falling below $170 amid concerns that 11.2 million SOL—valued at approximately $2.06 billion—will be unlocked on March 1 as part of FTX’s ongoing liquidation. Some traders argue that expectations of creditor repayments have already been priced into the market, limiting any potential upside.

Analysts are divided on whether the first $1.2 billion payout will have a meaningful impact on Bitcoin and altcoins. Markus Thielen, founder of 10x Research, noted in a client report that the initial distribution is too small to trigger significant price movements. However, the long-term effects remain uncertain. Some investors anticipate that a portion of the recovered funds will flow back into crypto markets, potentially bolstering demand for BTC and other digital assets over time.

FTX’s downfall remains one of the most notorious scandals in crypto history, with legal repercussions continuing to unfold. Founded in 2019 by Sam Bankman-Fried, FTX quickly rose to prominence, rivaling major exchanges like Binance and Coinbase before its abrupt collapse in November 2022. The company’s demise was fueled by revelations of financial mismanagement, including the illicit diversion of customer funds to its sister firm, Alameda Research. 

The resulting $8 billion deficit led to Bankman-Fried’s conviction on fraud charges and a 25-year prison sentence. His legal team is now seeking a retrial, alleging judicial bias, while reports suggest that his parents have been lobbying for a potential presidential pardon.

This article has been refined and enhanced by ChatGPT.