FTX's Structured Payout Plan
FTX plans to distribute $7.1 billion to its creditors, with the repayment process set to begin in February 2025. This structured resolution was confirmed by Sunil Kavuri, the representative for FTX creditors, who shared the details via Twitter. This repayment schedule is intended to provide a clear path forward for FTX's financial obligations and aims to restore market confidence, especially in the wake of increased scrutiny on cryptocurrency exchanges following various bankruptcies.
Details of the Payout Schedule
Sunil Kavuri, acting as the FTX creditor representative, announced on Twitter that FTX will proceed with distributing $7.1 billion to creditors through a series of payouts scheduled for 2025. These distributions are a critical component of the company's bankruptcy recovery plan, which was initiated after FTX's collapse due to allegations of financial mismanagement. Key figures associated with the bankruptcy proceedings include Sam Bankman-Fried, the former CEO who is currently serving a 25-year sentence for fraud, and representatives like Kavuri, who are responsible for overseeing the distribution process.
Before these planned payouts, FTX's total assets available for distribution were reported to be between $16 billion and $17 billion. The outlined payout schedule includes an initial distribution of $454 million on February 18, 2025, designated for smaller claims under $50,000. This will be followed by a larger distribution of $5 billion on May 30, 2025, intended for claims exceeding $50,000.
Sunil Kavuri, FTX Creditor Representative, stated: "FTX Distribution: 18th Feb 25: Claims < $50k paid at 120%. 30th May 25: Claims > $50k 72.5%. Future distribution dates prob a few eg Oct/Dec, 2026, 27 etc. Claims > $50k Those paid 72.5% will get 27.5% face value =100%. + Post petition interest ~40%-80%."
Comparison to Past Crypto Bankruptcies
The accelerated payout schedule for FTX creditors marks a significant development when compared to previous cryptocurrency exchange bankruptcies. For instance, Mt. Gox, another prominent cryptocurrency exchange, underwent a protracted bankruptcy process where creditors waited for nearly a decade to receive any form of repayment. This extended timeline for Mt. Gox highlights the relative speed and efficiency of FTX's current plan.
The current market data for Bitcoin (BTC) shows a price of $103,566.21 and a market capitalization of $2.07 trillion. Bitcoin holds a dominant market share of 59.21%, and it experienced a 1.57% increase in value over the past 24 hours. However, its trading volume saw a decrease of 11.67% in the same period, reaching $53.41 billion. Over the last 30 days, Bitcoin's price has declined by 12.03%, with its current circulating supply nearing its maximum supply.
The Coincu research team observes that FTX's payout strategy could contribute to market stability for creditors and offers a broader perspective on the regulatory requirements within cryptocurrency bankruptcies. While the speed of creditor recovery is unprecedented, the broader market may experience enhanced confidence due to FTX's commitment to full repayment and the distribution of interest. This approach has the potential to establish new benchmarks for financial recoveries within the cryptocurrency sector.