There are finally indications that the long-running bankruptcy of the defunct cryptocurrency exchange FTX is improving. Customers who have been waiting almost three years to get their money back will finally get it this September, as the FTX Recovery Trust has announced preparations to disburse $1.6 billion in creditor payouts
[Source :Cointegraph “FTX Recovery Trust to unlock $1.6B for creditors in September disbursement“
The action is among the biggest payouts since FTX’s stunning demise in late 2022, when the $32 billion exchange declared bankruptcy, leaving over a million users in a state of uncertainty.
One of the largest bankruptcies in cryptocurrency history was brought on by FTX’s demise. In November 2023, Sam Bankman-Fried, The founder and former CEO, was found guilty of conspiracy and fraud. The court-appointed Recovery Trust has been searching for and selling assets, such as cash reserves, stocks, and cryptocurrency, ever since.
The September payment will mostly target retail creditors, many of whom lost their life savings when the exchange collapsed, according to the Trust’s most recent update. [Source: Crypto Briefing “FTX to distribute $1.6B to creditors on September 30”]
According to the Trust, the payment is a “critical step” in meeting its commitment to clients while further asset recovery activities are underway.
According to industry watchers, compensation might reach one million creditors. The quantum of each claimant’s payout, however, will be determined by the trust’s remaining liquid assets.
It is thought that giving ordinary investors priority is a step in the right direction toward making the process more equitable. This payout is particularly noteworthy because many small investors lack the financial and legal resources of institutional backers.
However, analysts caution that ongoing litigation may cause delays in future payouts. The ownership of the confiscated assets is still the subject of several lawsuits; thus, creditors might not be compensated in the near future.
Although the $1.6 billion settlement is nice, legal specialists warn that it only covers a percentage of all claims; according to some estimates, FTX’s liabilities could exceed $8 billion.
The September payout will mark a significant turning point in the protracted recovery process, creditors are unlikely to see a complete resolution anytime soon. According to the Trust, it will keep selling off assets and, if practical, take legal action to recover money.
Many ex-FTX users are relieved that long-awaited payouts will finally arrive, but they are also unsure about how much they will ultimately recoup as a result of this impending distribution.
OceanPal Secures $120 Million To Launch NEAR-Based Treasury Platform