FTX Repayments Resume May 30th With $5B in Payouts — How Much Will Reenter the Market?

In a major step forward for former customers of the now-defunct cryptocurrency exchange FTX, the FTX Recovery Trust has announced a second major payout of over $5 billion to creditors. This distribution, set to commence on May 30, 2025, follows an initial round of repayments made in February.

The upcoming distribution is part of FTX's broader reorganization plan, approved by the U.S. Bankruptcy Court for the District of Delaware on October 7, 2024. The plan aims to reimburse 98% of FTX customers, with each eligible recipient expected to recover roughly 119% of their account value.

Who Is Getting Paid?

This upcoming distribution targets holders of allowed claims in the following categories:

Allowed Class 5A Dotcom Customer Entitlement Claims: These are claims from international customers who held assets on the FTX platform. They can expect to receive a 72% distribution.

Allowed Class 5B U.S. Customer Entitlement Claims: These are claims from U.S customers who held assets on the FTX platform. They can expect to receive a 54% distribution.

Allowed Classes 6A General Unsecured Claims and 6B Digital Asset Loan Claims: These include claims from general creditors without specific collateral backing. Each class can expect to receive a 61% distribution.

Allowed Class 7 Convenience Claims: These are smaller claims that have become allowed. This class can expect to receive a 120% distribution.

Sunil Kavira, who represents one of the largest FTX creditor groups, put out a post on X regarding the claims:

Recycled Capital? - What This Could Mean

The prevailing sentiment on X is that much of the repaid funds will likely be reinvested into the crypto market, potentially fueling increased buying activity and further market momentum.

Many creditors are investors who may see current market conditions as a prime opportunity to reinvest in digital assets. This influx of capital could boost market liquidity and increase trading volumes.

Zaheer Ebtikar, Chief Investment Officer and founder of Split Capital, had earlier estimated that about half of the claims had already been sold, and a non-trivial amount from the other half are “tainted” claims that users will never receive. He believes that 25-50% of the FTX claims that are actually going to claim holders would be injected back into the market.

If that estimation holds, we could be in for one of the largest liquidity injections into the crypto market in recent times.

Whether these funds flow back into the crypto market depends on several factors, including each investor’s risk appetite, current market conditions, and the overall economic landscape.

Implications for Creditors

FTX’s recovery efforts have been strengthened by favorable market conditions and the liquidation of key assets, including significant holdings in cryptocurrencies like Solana ($SOL). As a result, the total value of assets available for distribution is an estimated $14.7 billion to $16.5 billion.

Repayments are calculated based on the U.S. dollar value of customer deposits as of November 2022. However, some creditors have voiced frustration over missing out on the significant gains in the crypto market since then. For example, Bitcoin has climbed from around $17,000 in November 2022 to over $100,000.

Despite these concerns, the upcoming distribution represents a significant milestone in resolving the financial aftermath of FTX’s collapse.

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