FTX Digital Markets set to repay "convenience class" creditors

FTX Digital Markets, the Bahamian subsidiary of the defunct cryptocurrency exchange FTX, has announced that it will begin repaying its creditors.

This development comes after the exchange’s high-profile collapse in November 2022, which left many users without access to their funds.

According to a distribution notice shared by FTX creditor Sunil Kavuri on February 4, FTX Digital Markets will commence the repayment process on February 18, focusing initially on "convenience class" creditors. These are users with claims of up to $50,000, who are slated to receive full compensation for their adjudicated claim value, plus an annual interest rate of 9% dating back to November 2022.

The repayment schedule is based on information from a creditor who sought recovery through BitGo, a crypto firm involved in the distribution of FTX funds. It remains uncertain whether Kraken, another platform tasked with aiding the repayment process, will adhere to a similar timetable. Provided all claims are filed accurately, FTX could be expected to disburse over $16 billion to its users.

In the wake of extensive bankruptcy court proceedings and efforts to retrieve assets from various cryptocurrency firms, FTX debtors announced the implementation of their reorganization plan on January 3. The first batch of reimbursements is anticipated to reach eligible recipients by early March.

The FTX saga reached a climax when the exchange, once a dominant force in the crypto market, experienced a sudden liquidity crunch and filed for bankruptcy in November 2022. Sam Bankman-Fried, the CEO at the time, stepped down and faced legal repercussions, receiving a 25-year prison sentence in the United States.

Sunil Kavuri, during Bankman-Fried’s sentencing, expressed that he had endured two years of hardship due to FTX’s downfall, with personal losses exceeding $2 million.

The criminal proceedings concluded by the end of 2024 with several former executives from FTX and Alameda Research, including Caroline Ellison and Ryan Salame, receiving prison sentences, while Nishad Singh and Gary Wang were given time served.

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