- FTX to begin distributing over $1.2 billion to creditors, starting with claims under $50,000.
- Repayments tied to asset prices during bankruptcy spark mixed reactions among investors.
- Industry experts view the payout as a potential liquidity boost for the crypto market.
FTX, once the world’s second-largest centralized cryptocurrency exchange, is finally moving forward with repaying its creditors. After more than two years of frozen funds, users owed up to $50,000 in digital assets have until January 20 to meet repayment requirements. This deadline marks the beginning of the first wave of distributions, which could help restore confidence in the crypto industry.
According to Sunil, a key FTX creditor and member of the FTX Customer Ad-Hoc Committee, repayments will likely begin after January 20. He shared this update via an X post on January 11, emphasizing that no payments will be made until pre-distribution requirements are met.
Market Reactions: Will Repayments Bring Volatility or Stability?
The repayment plan, approved in October 2024, states that 98% of FTX users could receive up to 119% of the declared value of their funds—but there’s a catch. These repayments are based on cryptocurrency prices at the time of bankruptcy. With Bitcoin’s price up 370% since November 2022, some creditors feel shortchanged.
Anndy Lian, a blockchain expert, noted that the market impact will depend on individual investors’ strategies. He explained that smaller investors may choose to sell their recovered funds for financial security, while others might reinvest or hold, betting on future growth. “It’s really all about risk appetite and personal circumstances,” Lian said.
Drawing comparisons to the Mt. Gox case, Lian highlighted how many creditors opted to hold onto their recovered Bitcoin, hoping for greater long-term gains. With Bitcoin valued over 8,500% higher since Mt. Gox’s collapse, the precedent may encourage FTX creditors to hold rather than sell their distributed assets.
A Potential Liquidity Event for the Crypto Market
Beyond individual investor reactions, the incoming $1.2 billion payout could represent a “significant liquidity event” for the crypto space, according to Philipp Zentner, CEO of LI.FI protocol. Zentner described current market conditions as a “Black Friday sale for crypto,” suggesting this repayment could encourage fresh investments in digital assets.
Crypto firms BitGo and Kraken have stepped up to assist with the repayment process, ensuring a smooth distribution for creditors. With the total payout potentially reaching $16 billion, this moment could signal a turning point for the industry—one of recovery and newfound optimism.
