FTX Debt Repayment Timeline Revealed – $11.4B Payouts Start in May

FTX, the once-prominent cryptocurrency exchange, is finally preparing to pay back its major creditors. After months of legal battles and financial chaos, the company has managed to gather $11.4 billion and is now ready to make substantial payouts by the end of May, according to a recent Bloomberg report.

While smaller creditors with “convenience claims” have already received payments, FTX will begin paying its larger debt holders on May 30. Bankruptcy lawyer Andrew Dietderich shared this update with the judge overseeing the Chapter 11 case. The main creditors include investors owed millions of dollars, as well as institutions that had stored cryptocurrency on the FTX platform.

A Long Line of Creditors Waiting for Payouts

FTX’s sudden downfall in 2022 left thousands of creditors in limbo. While quick settlements would help recover the most value, the process has been slowed by the enormous number of claims filed after the exchange’s collapse.

Adding to the frustration, Bitcoin’s value has surged more than four times since FTX went bankrupt. Many former customers had hoped to be repaid in digital assets instead of cash, as their holdings would have been worth much more today.

27 Quintillion Claims?

Paying creditors is further complicated by a flood of questionable claims. Dietderich explained that some claims might violate “know your customer” (KYC) regulations, which require FTX to verify creditor identities. Others may not be valid at all, making the process even more time-consuming.

A particularly shocking detail is that FTX is dealing with a total of “27 quintillion” claims. A quintillion is a 1 followed by 18 zeros—one billion times a billion. In bankruptcy cases, lawyers typically eliminate duplicate, exaggerated, and false claims before making payments. According to Dietderich, FTX is facing billions of these flawed claims.

The Pressure to Pay Quickly

FTX is under pressure to repay creditors as soon as possible. The company is earning less interest on the $11.4 billion it holds than the 9% interest rate creditors are accumulating while waiting for their money. The longer the process drags on, the more costly it becomes.

FTX filed for bankruptcy in November 2022 after its crypto platform shut down and was handed over to insolvency experts. A court approved its payout plan in October 2023, allowing the repayment process to move forward.

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SEC Nominee Questioned Over FTX Ties

Meanwhile, FTX’s collapse continues to have ripple effects in Washington. Lawmakers recently questioned Paul Atkins, a potential nominee for SEC Chair, about his connections to the failed exchange.

Atkins is involved with Patomak Global Partners, a firm FTX hired as an adviser in 2022. Senator Elizabeth Warren raised concerns about a possible conflict of interest if Atkins becomes SEC Chair, given his firm’s past ties to FTX. Lawmakers also criticized former SEC Chair Gary Gensler for his approach to crypto regulation during his time in office.

With repayments now in sight, creditors finally have a timeline for getting their money back. However, the process of sorting through claims and resolving legal hurdles will continue to be a complex challenge.

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Billions recovered, billions owed, and quintillions of claims – FTX’s downfall was messy, and cleaning it up is proving to be just as chaotic.