FTX will begin distributing $1.2B to creditors after Trump’s inauguration
Update 11:00 am UTC: This article has been updated to include a quote from Philip Zentner.
FTX is preparing to distribute more than $1.2 billion in payments to former users of the cryptocurrency exchange.
FTX, once the world's second largest centralized cryptocurrency exchange (CEX), is about to start refunding users who have been unable to access their funds for more than two years.
Exchange users who owe up to $50,000 worth of digital assets have until January 20 to meet their repayment requirements.
FTX, which is part of the FTX Customer Ad-Hoc Committee, which is part of the largest group of 1,500 FTX creditors, will begin refunding claims up to $50,000 after January 20.
January 20: FTX has given until January 20 to meet the pre-distribution requirements for the first broadcast. Payment may not start before then,” Sunil wrote in a January 11 X post.
FTX pre-distribution requirements, court application. Source: Sunil
The January 20 deadline coincides with the inauguration of US President-elect Donald Trump, which is expected to push for greater crypto regulatory transparency and the adoption of Bitcoin legislation. The bill proposes to create a Bitcoin (BTC) reserve for the US, the world's largest economy.
Combined with new capital from the upcoming FTX payouts, January 20th could trigger the next leg of the 2025 crypto market cycle, with Bitcoin surpassing $200,000, according to some industry watchers.
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Will FTX payments lead to crypto market volatility?
In the year Under the FTX restructuring plan approved in October 2024, users who claim up to $50,000 are the first group of investors to receive payouts. The plan states that 98% of FTX users can be paid 119% of the declared price. Funds.
However, some creditors have criticized the payment model based on cryptocurrency prices during bankruptcy. For example, since November 2022, the price of Bitcoin has increased by more than 370%.
While some crypto investors expect higher market volatility, FTX payments are critical to correcting past losses and repairing the industry's reputation.
The payout will vary based on individual risk appetite, according to author and blockchain expert Andy Lian.
Liane told Cointelegraph that some of the payments could be converted to other cryptocurrencies:
“Small investors who were hit hard by the FTX crash may be inclined to sell more for financial security. Those with a little more faith in crypto's long-term prospects may stick with betting on future growth. It all depends on individual circumstances and appetite.
“MT. Gox scenario sets the stage for many people to choose to hold onto their coins hoping for better days ahead,” Lien added.
Related: UK Judge Dismisses $770M Bitcoin Dump Hard Drive Case
Gox creditors have chosen to hold onto their BTC, despite Bitcoin's appreciation of more than 8,500% in the 10 years since the collapse of the Japanese currency.
On July 30, Mt. Gox has completed 41.5% of its Bitcoin distribution to lenders, receiving a total of 59,000 Bitcoin.
Despite receiving nearly $4 billion in bitcoins, the Mt. Gox lenders were not selling, according to a July 29 Glassnode report:
“Creditors have chosen to accept BTC rather than fiat, which is new under Japan's bankruptcy law […] Therefore, it is highly likely that only a fraction of these distributed coins will actually be sold to the market.
LI.FI protocol co-founder and CEO Philip Zenter said the $1.2 billion in revenue could be a “significant liquidity event for crypto.” He told Cointelegraph.
“Overall, it's a macro-positive time for the industry, especially given the current favorable market conditions, and prices now feel like a ‘Black Friday' sale for crypto.”
Crypto companies Bitgo and Kraken announced in December that they will help distribute recoveries to FTX users. If all users make full claims, the exchange is expected to pay around $16 billion.
How bad is the FTX crash for Bitcoin? OOnchainanalyst explains. Source: YouTube
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