FTX, the cryptocurrency exchange previously led by Sam Bankman-Fried, is set to start repaying its main creditors by the end of May, according to Bloomberg’s coverage of court proceedings in Delaware this week.
The company has amassed $11.4 billion in cash to distribute to the numerous parties affected by its bankruptcy in 2022, with the initial payments to major creditors scheduled for May 30.
These creditors include institutional investors and companies that held cryptocurrency on FTX’s platform. Smaller creditors with claims under $50,000 have already begun receiving their share of the funds.
FTX’s collapse resulted in significant financial losses and frustrated creditors, many of whom were expecting repayment in cryptocurrency rather than fiat currency. The price of bitcoin has surged more than fourfold since the bankruptcy, further exacerbating the impatience of those awaiting reimbursement.
The process of settling FTX’s financial obligations has been hindered by a high volume of claims, some of which are reportedly dubious. Andrew Dietderich, a bankruptcy attorney representing the company, informed the court that FTX has received an astronomical number of claims, many of which are duplicates or fraudulent.
Accruing interest payments are adding to the pressure. While FTX is earning a modest return on its cash, legitimate creditors are entitled to 9% annual interest on outstanding claims. The longer the repayment process takes, the more the company could end up owing.
