FTX Digital Markets, which is the Bahamian division of the now-defunct FTX exchange, is preparing to distribute its first wave of repayments to creditors on February 18. This FTX repayment initiative marks a significant step in addressing the financial fallout from the exchange’s dramatic collapse, which left an estimated $9 billion in losses.
Latest FTX Repayment Details
The payments will be directed toward creditors with claims below $50,000, offering some relief to a group of users who have waited more than a year for compensation. Sunil, a member of the FTX Customer Ad-Hoc Committee representing over 1,500 creditors, confirmed in a Feb. 4 post on X that the funds will be distributed at 3:00 pm UTC.
This initial round of repayments will inject approximately $1.2 billion into the market, which industry leaders see as a crucial moment for rebuilding confidence in the crypto sector. Alvin Kan, chief operating officer at Bitget Wallet, noted that the return of funds could influence market dynamics.
“The $1.2 billion repayments may see ‘a significant portion reinvested into cryptocurrencies, potentially impacting market liquidity and prices,’” Kan said, according to Cointelegraph report. He also highlighted that the repayments demonstrate resilience in the industry, though investor reactions might be mixed.
Kan pointed out that while the repayments could boost market sentiment, they are based on asset prices from 2022, when FTX declared bankruptcy. Since then, Bitcoin has surged over 370%, significantly reducing the purchasing power of the reimbursed amounts. “This event could boost investor sentiment by demonstrating market recovery from the FTX collapse, though the sentiment might be mixed due to the payout being based on lower 2022 valuations,” he said.
Mixed Reactions to Repayment Model
While the move is widely seen as a step toward justice, some creditors have voiced frustration over the valuation method. Compensation is being calculated based on cryptocurrency prices at the time of FTX’s bankruptcy filing in November 2022, rather than at current market rates.
Despite these concerns, some industry experts believe the repayments mark an important psychological shift for crypto investors. Magdalena Hristova, public relations manager at Nexo, emphasized the broader significance of the event.
“The collapse impacted many investors and cast a shadow over crypto. For retail investors, especially those without diversified portfolios, these repayments offer not just the return of funds but a sense of stability and peace of mind,” she explained.
Also, it’s important to note that the repayment process is far from over, as larger creditors with higher claims are still awaiting further updates. While the immediate market impact may be limited, the gradual return of funds could play a role in restoring trust in the sector over time.
For now, the first wave of repayments represents a milestone in the long and complex recovery process following one of the largest financial failures in crypto history.
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