FTX is set to begin paying its main creditors with $11.4 billion in cash, marking a significant step towards recovery after years of uncertainty.
After a year of uncertainty, FTX is poised to begin paying its main creditors at the end of May, with $11.4 billion in cash gathered for distribution.
The FTX creditor payout is a multi-step process involving the liquidation of assets, identification of creditors, and distribution of funds.
According to reports, over $8 billion in assets have been recovered from FTX's bankruptcy estate.
However, the process has been slow due to disputes among creditors and regulatory hurdles.
The US Bankruptcy Court for the Southern District of New York is overseeing the case, with a committee representing unsecured creditors playing a crucial role in negotiations.
The process towards recovery has been complicated by a large number of claims, many of which are duplicates or outright fraudulent, according to ’27 quintillion’ claims reported by Andrew Dietderich, a bankruptcy attorney for the firm, as per Bloomberg.
FTX, a cryptocurrency derivatives exchange, filed for bankruptcy on November 11, 2022.
The company's collapse was caused by a liquidity crisis triggered by withdrawals exceeding $6 billion.
FTX's CEO, Sam Bankman-Fried, resigned and was replaced by John J. Ray III, who described the company's financial situation as 'a major failure of corporate controls.'
An investigation by the US Department of Justice found that FTX had misused customer funds for investments in other companies.

Payments to major creditors will start on May 30, with smaller creditors with claims below $50,000 having already begun receiving distributions. These include institutional investors and firms that held crypto on FTX’s platform.
FTX’s collapse left a financial crater and a trail of frustrated creditors, many of whom expected to be repaid in crypto, not dollars. The price of bitcoin has more than quadrupled since the bankruptcy, intensifying frustrations among those waiting for their assets back.
As of February 2023, FTX's bankruptcy filing has left over 1 million creditors facing potential losses.
The collapse of the cryptocurrency exchange has sparked widespread frustration among investors, with some reporting significant financial losses.
According to reports, FTX owes its creditors around $8 billion in assets and liabilities.
Creditors are now waiting for a court-appointed trustee to distribute remaining funds, but the process is expected to be lengthy and complex.
The task of unwinding FTX’s balance sheet has been slowed by the large number of claims, and interest payments are compounding the urgency. Legitimate creditors are entitled to 9% interest annually on unpaid claims, and the longer it takes to pay, the more the company could owe.