tl;dr
The FTX estate has initiated a creditor repayment program, releasing $1.2 billion to smaller claim holders and targeting "Convenience Class" claims under $50,000. The plan administrator, John J. Ray III, considers this a significant milestone. Larger creditors may not receive immediate compensation,...
FTX estate has launched a creditor repayment program, releasing $1.2 billion and aiming to distribute a total of $14.5 to $16.3 billion in compensation. The initial distribution targets "Convenience Class" claims under $50,000, with larger creditors not receiving immediate compensation. There is potential dissatisfaction among creditors due to the variance in asset valuations at the time of FTX's collapse and the repayments based on November 2022 valuations.
This distribution strategy involves selling off FTX's SOL, with concerns around the unlocking of 11.2 million SOL tokens on March 1 and its potential impact on market dynamics.
FTX's bankruptcy estate began the creditor repayment program, starting by releasing $1.2 billion to smaller claim holders. This step is part of the exchange's efforts to help former customers recoup funds. The distribution specifically targets "Convenience Class" claims under $50,000, benefitting the majority of affected users.
As per the bankruptcy estate's announcement in October, creditors and customers are likely to receive between $14.5 billion to $16.3 billion in total compensation. However, larger creditors may not receive immediate compensation, and some claimants have struggled to prove their eligibility for asset recoupment. Additional "catch-up" payments are planned for Q2 2025.
Julian Grigo, head of institutions and fintech at asset custody protocol Safe, believes that the settlement will leave many creditors dissatisfied, especially given that reimbursements are based on asset prices at the time of FTX's collapse, potentially resulting in only a fraction of their original holdings being recovered.
The disparity in asset valuations has also raised debates among creditors about fair value determination in bankruptcy proceedings, particularly for Bitcoin-denominated claims. Furthermore, the estate's distribution strategy includes the selloff of FTX's SOL, which has previously sparked concerns about potential market impact.
The upcoming unlocking of 11.2 million SOL tokens on March 1 could potentially increase the circulating supply of SOL, thus impacting market dynamics. The estate's careful selloff of SOL has been aimed at avoiding crashing the market, but historical examples point to heightened price volatility following large token unlocks, raising concerns about potential market impact.