According to a recent report from Bloomberg, the bankrupt cryptocurrency exchange FTX, formerly run by Sam Bankman-Fried, is planning to start paying its main creditors at the end of May. The company has managed to gather $11.4 billion in cash to distribute to thousands of parties affected by its 2022 bankruptcy, with the first payments to major creditors set for May 30.
These creditors include institutional investors and firms that held crypto on FTX’s platform. Smaller creditors with claims below $50,000 have already begun receiving distributions. However, the collapse of FTX has left a financial crater and a trail of frustrated creditors, many of whom expected to be repaid in crypto rather than dollars. With the price of bitcoin more than quadrupling since the bankruptcy, these frustrations have only intensified.
The process of unwinding FTX’s balance sheet has been hindered by a large number of claims, many of which are reportedly questionable. According to Andrew Dietderich, a bankruptcy attorney for the firm, FTX has received “27 quintillion” claims, many of which are duplicates or outright fraudulent.
The urgency to pay creditors is compounded by the fact that interest payments are accruing. While FTX earns only a modest return on its cash, legitimate creditors are entitled to 9% interest annually on unpaid claims. This means that the longer it takes to pay, the more the company could owe.
In a new plan, the estate has stated that nearly all FTX creditors will receive 118% of their funds back in cash. However, this is subject to change as the bankruptcy proceedings continue.
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