FTX Estate began paying off creditors at 10am on February 18th at 10am, almost three years after the crypto exchange collapsed.
According to Sunil Kabbalah, the head of the property’s largest creditor group, FTX began distributing funds to creditors this week, starting with “small bills” of less than $50,000.
In October 2024, a US bankruptcy judge approved a plan to reorganize FTX after years of trial proceedings. Bitgo and Kraken were selected as repayment partners, but the court ruled that creditors could receive payments through Stablecoins if they wanted.
The first phase of the refund will pay $800 million out of the $1.2 billion, Kabbalah said. FTX plans to distribute a total of about $13 billion to creditors, but the property aims to keep about half of that allocation in dispute claims.
According to Kavara, small bill repayments are $400 million unpaid to the original users of the decommissioned Crypto Exchange, with billing buyers making up the other half.
This initial repayment exercise covers approximately 162,000 claims out of an estimated 460,000 potential claimants. This process also includes payments to Bahamas-based users, as previously reported.
FTX was founded in May 2019 by former Crypto Tycoon Sam Bankman-Fried, also known as SBF. By 2021, Bankman-Fried startup was one of the biggest digital asset exchanges and was considered a rival to Changpeng Zhao’s Binance and US-based Coinbase.
The SBF empire was unraveled in late 2022 after media reports revealed a significant contradiction in the FTX balance sheet. Subsequent controversy crippled Bankmanfried’s business and led the exchange to file for Chapter 11 bankruptcy.
Shortly afterwards, Bahamian authorities, where FTX was based, arrested the bank fishing and handed him over to Manhattan.
The judge sentenced the SBF to 25 years in prison for fraud and other criminal charges following the brief trial. Bankmanfried argued judicial bias and called for a new court battle. His parents also reportedly sought a presidential pardon from Donald Trump’s office.
