FTX starts $5B payouts — Here’s what you need to know

The FTX Recovery Trust has initiated a second round of payments to its creditors. On May 30, the Trust started a $5 billion payout to eligible creditors in the Convenience and Non-Convenience Classes who have completed the pre-distribution requirements.

According to a May 28announcement, thecreditors’ distributionwill include Dotcom Customer Entitlement Claims, which are receiving a 72% distribution; US Customer Entitlement Claims, which are receiving a 54% distribution; and Convenience Claims, which will receive a 120% distribution.

Additionally, General Unsecured Claims and Digital Asset Loan Claims will each receive a 61% distribution as per the reimbursement plan. Recipients should receive their claims in one to two business days from theofficial distribution partners, Kraken and Bitgo.

Crypto investors and speculators closely monitor FTX creditor distributions as the reimbursements could impact the digital asset markets and cause price volatility if the liquidity from the reimbursements is offloaded or swapped on retail exchanges.

Related:Binance seeks to dismiss $1.76B FTX lawsuit, blames SBF for collapse

The first round of FTX creditor reimbursements

Thefirst round of FTX creditor paymentsfor recipients with less than $50,000 in claims was distributed on Feb. 18 and totaled $1.2 billion.

At the time, Alvin Kan, chief operating officer at Bitget Wallet, told Cointelegraph that a “significant portion” of the $1.2 billion could be reinvested back into the crypto markets.

Reimbursement plan leaves creditors high and dry

The FTX reimbursements have sparked controversy among creditors and customers of the now-defunct exchange.

In September 2024, FTX creditor Sunil Kavuri shared court documents ruling that FTX creditors would be reimbursed as of the date their petition was filed instead of at current market prices.

Creditors of the former exchangereceived only 10%–25% of their cryptoholdings’ value due to the court ruling, according to the investor.

“Crypto holders are not whole at petition date prices as confirmed by the debtors, the United States Department of Justice, and Judge Kaplan,” Kavuri told Cointelegraph.

For reference, the creditor petition was filed during the depths of the crypto winter when the price of BitcoinBTC$103,957BitcoinChange (24h)1.92%Market Cap$2.06TVolume (24h)$36.02BView Morewas roughly $16,000.

Kavuri sounded the alarm again in February this year, when he called attention to creditors in 163 countries who areineligible to receive reimbursements, including residents in Egypt, Iran, Russia, Greenland, Pakistan andothers.

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