- FTX is preparing to redistribute tokens to its creditors beginning Tuesday.
- The initial repayments will focus on creditors owed $50,000 or less.
- A 10x Research analyst suggests that the initial redistribution might not significantly impact the crypto market.
On Monday, Bitcoin (BTC) and Solana (SOL) saw declines as the collapsed crypto exchange FTX is set to commence the redistribution of tokens owed to creditors from its 2022 downfall, starting with those holding claims of $50,000 or less. This news has elicited mixed reactions from investors, with some viewing it as a potential negative for the crypto market.
FTX repayment initiatives to begin this week
The defunct crypto exchange FTX is gearing up to launch its first round of repayments to creditors following its late 2022 collapse.
This week, FTX creditors will start receiving payments as part of the exchange’s continuing bankruptcy settlement.
Crypto investment company Monolith.vc has announced that the formal repayment process will kick off on Tuesday.
The first recipients will be Convenience Class creditors with claims of $50,000 or less, who are set to receive complete repayment along with a 9% annual post-petition interest as outlined in FTX’s restructuring plan.
While some believe that this influx might enhance market valuations, opinions are still split.
“FTX will distribute roughly $1.2 billion to Convenience Class creditors […] not substantial enough to create a significant impact,” remarked Markus Thielen, founder of 10x Research, in his client note on Monday.
In total, FTX is expected to reimburse investors between $14.7 billion and $16.5 billion in phases. The distribution of funds will be managed by crypto custodian BitGo.
Despite the imminent repayments, numerous crypto holders have voiced their dissatisfaction with FTX’s decision to base its distributions on pricing from November 2022.
This approach has affected investors who held Bitcoin on the platform before its collapse. BTC has since reached several new highs since November 2022, surging nearly 500%. The leading cryptocurrency is trading below $97,000 at the time of writing.
The upcoming redistribution has also raised concerns about Solana, especially considering FTX’s plan to release 11.2 million SOL — valued at $2.06 billion — on March 1, marking one of the largest token distributions from its bankruptcy assets.
This unlock could exert downward pressure on the price of SOL, which has fallen below $180 in the last 24 hours, potentially driven by apprehensions regarding the ramifications of the redistribution plans.
As repayments proceed, the choice to utilize outdated price evaluations continues to be a notable point of contention among creditors.
The FTX collapse occurred after it was unveiled that the firm illegally redirected customer funds to Alameda Research, resulting in an $8 billion shortfall.
Investor alarm and widespread withdrawals accelerated the exchange’s downfall in 2022, leading to FTX’s bankruptcy and fraud allegations against its CEO, Sam Bankman-Fried (SBF).
