FTX’s distribution of creditor funds is still expected to start in Q4. The earliest stage of the process is just weeks away, with $16B of crypto assets set to be released back into circulation.
Even after its crash and deep losses, FTX holds assets estimated to as much as $16B. The remaining wallets of the exchange and Alameda research were scraped and sent into custodial wallets. Some of the assets are still visible in the remaining FTX wallets, or special bankruptcy addresses.
The claims based on creditor history and FTX balances are estimated at $16.264B. FTX spent months reorganizing and liquidating some of its assets, establishing $12B in cash reserves and sufficient stablecoins. In May, FTX issued a statement claiming its recovered funds were between $14.5B and $16.3B, enough to potentially repay 98% of its creditors.
The most contentious point is that FTX continues to claim all creditors will be made whole. Unfortunately, BTC depositors on the exchange held whole coins, now trading above $63,000. FTX did not hold or keep these coins in safe custody. So, it will instead repay the monetary value of BTC at the time of the exchange’s failure, which was $16,800.
The good news is FTX has finished most of the selling and liquidation, only holding a few remaining wallets of tokens and the occasional NFT. The bad news is that the process may not be straightforward and simple, and will take into account a long list of other claims and settlements.
Creditors prepare for a prolonged repayment process
Even if FTX creditors still have an appetite for risk, their funds will have to wait for the lengthy and involved process of settlements and repayments.
The funds that have the highest chance to enter the crypto market come from the claims of Dotcom customers principal claims and recovery. Class 5A and Class 5B customers are the classes to watch closely for their potential to return as crypto investors. Class 5A customers and US-based Class 5B customers also have the highest claims to FTX funds, along with Class 6A, known as unsecured claims.
Based on the Amended Chapter 11 plan, Class 5A will be paid in full with interest, but only after distributions to all other classes.
Before that, FTX will satisfy tax claims and other fees, leaving closer to $12B in the hands of crypto insiders.
As for NFT holders, they will have their items returned in kind, as FTX has retained several valuable Apes, Azukis and other top collections.
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