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Ruholamin Haqshanas
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Ruholamin Haqshanas
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Bankrupt crypto exchange FTX is preparing to distribute over $1.2 billion in repayments to its users who have been unable to access their funds for more than two years.
Users owed up to $50,000 worth of digital assets have until January 20, 2025, to meet the pre-distribution requirements necessary to receive their repayments.
According to Sunil, a prominent FTX creditor and member of the FTX Customer Ad-Hoc Committee, repayments are unlikely to begin before the January 20 deadline.
“FTX has given until Jan. 20 to fulfill pre-distribution requirements for the initial distribution. Repayments likely won’t start before then,” Sunil stated in a January 11 post on X (formerly Twitter).
FTX Repayment to Inject Significant Capital into Crypto Market
The upcoming repayments could inject significant capital into the crypto market, potentially fueling further growth.
Some industry watchers predict that Bitcoin’s value could surpass $200,000, driven by market activity surrounding FTX repayments and increased regulatory clarity in the United States.
FTX’s restructuring plan, approved in October 2024, outlines that users claiming up to $50,000 will be the first group to receive repayments.
Notably, 98% of users are expected to be reimbursed 119% of the declared value of their funds.
However, the repayment model has faced criticism, as it reimburses creditors based on cryptocurrency prices at the time of FTX’s bankruptcy.
Since November 2022, Bitcoin prices have surged over 370%, leading some claimants to question the fairness of the valuation.
Despite this, the repayments represent a crucial step in rebuilding trust within the cryptocurrency sector.
Anndy Lian, a blockchain expert, highlighted that the impact on the market will vary based on individual investor strategies.
“Smaller investors might sell for financial security, while others could hold onto their funds, betting on long-term growth,” Lian noted, drawing parallels to the Mt. Gox bankruptcy case.
The Mt. Gox collapse, a defining moment in cryptocurrency history, saw creditors receive significant Bitcoin distributions.
Despite a remarkable 8,500% increase in Bitcoin’s value since the exchange’s collapse, many creditors chose to hold onto their assets, underscoring the diverse reactions of investors to such events.
BitGo and Kraken to Assist with FTX Repayments
Crypto firms BitGo and Kraken have announced their involvement in assisting with FTX’s repayments.
If all eligible users file complete claims, FTX could distribute approximately $16 billion in total recoveries.
Last week, Backpack Exchange, a cryptocurrency trading platform founded by former FTX and Alameda Research employees, claimed that it has officially acquired FTX EU, the European arm of the collapsed FTX exchange.
However, FTX denied the claims, saying that the deal has not been approved by the US Bankruptcy Court in Delaware.
Meanwhile, in the US, the Justice Department is seeking the return of up to $13.25 million in political contributions linked to former FTX executives, as revealed in a recent federal court filing.
Judge Lewis Kaplan, who is overseeing the criminal proceedings against former FTX CEO Sam Bankman-Fried and his associates, approved the government’s request for an extension until January 15 to negotiate with various political action committees (PACs).
