FTX begins its massive payment program to its creditors today

With assets worth between $12.800 billion and $15.700 billion recovered, FTX creditors will be able to begin receiving compensation, although the Bitcoin payment limit poses challenges due to the cryptocurrency's soaring value since the exchange's collapse.

After more than two years of intense negotiations, FTX is about to begin its creditor repayment program, a crucial step in the reorganization process following its collapse in November 2022. 

According to the approved plan, the first payments will be made starting today, February 18, prioritizing creditors who are part of the “convenience” classification, which includes those investors who claim up to $50.000. The plan also details that those creditors who claim amounts greater than $50.000 will begin to be reimbursed in the second quarter of this year. 

The reorganization plan, which was approved by a U.S. judge in October 2024, provides for 98% of creditors to recover at least 118% of the value of their claim in cash. While specific details vary by creditor category, the company has said it is working to streamline the process and ensure payments are made efficiently and transparently.

FTX's return

FTX’s reorganization plan, which has required months of negotiation and planning, seeks to compensate creditors fairly and efficiently. The so-called “Convenience Class,” which includes those creditors claiming up to $50.000, will be the first to receive payments, which must be delivered within three business days of the plan’s initiation. 

According to FTX projections, around $7.000 billion will be distributed among the platform's creditors in this initial stage, while The total amount to be repaid is estimated at around $17.000 billion.  

In order to receive compensation, creditors must meet the requirements set by FTX, which include registering on the FTX Debtor Client Portal, completing Know Your Customer (KYC) verification processes, and submitting the necessary tax documentation. Once these steps have been completed, creditors must select from the designated platforms to receive their payments.

The repayment plan also includes the distribution of crypto assets, though specific details vary depending on the category of each creditor. While most compensation will be made in cash, some creditors could receive partial payments in cryptocurrencies, which has raised concerns due to market volatility and the current value of Bitcoin, which far exceeds the limit set by FTX.

The price of Bitcoin and its impact on payments to creditors

The surge in Bitcoin's price over the past two years, reaching a value of over $96.500 at the time of writing, has made this cryptocurrency a key asset for FTX creditors. However, the BTC payment limit The price set by the platform, at around $20.000 per Bitcoin, has raised doubts among creditors who will receive compensation in this cryptocurrency. 

This limit, which was set at a time when Bitcoin's value was significantly lower, could result in lower or less favorable compensation than what creditors could get if they sold their bitcoins in the current market. On the other hand, those who choose to hold onto their BTC could benefit from future upside, although they also risk suffering losses if the market experiences a correction.

However, the start of platform refunds is injecting a wave of optimism, due to the significant liquidity that these payments can introduce into the market. 

Optimism floods the crypto market

While the start of payments to creditors marks significant progress in FTX's recovery process, the road to normalization is still long. The company has managed to recover between $12.800 and $15.700 billion in assets, an amount that, while considerable, does not cover all of the losses suffered during its collapse.

On the other hand, while some analysts have expressed optimism about FTX's future, others point out that a full recovery of the company is still far from a reality. Still, the start of payments to creditors represents an important step towards resolving a dark chapter in the history of cryptocurrencies.

In short, FTX's payment program to its creditors, which will begin today, marks a milestone in the company's recovery process following its collapse in 2022. 

Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.