After years of uncertainty, FTX, the once-thriving cryptocurrency exchange, is set to repay over $1.2 billion to its users, marking the first step in its plan to return up to $16 billion to creditors. Some users have been locked out of their funds since the platform’s collapse, and this repayment comes as a relief to many.
The repayment process requires creditors to complete tasks such as submitting tax forms and completing their Know Your Customer (KYC) verification by January 20th to receive payments in the first round. Those who miss this deadline will still be included in future repayment rounds but will not be part of the initial distribution unless they fulfill the necessary requirements.
One point of contention among creditors is the use of past cryptocurrency prices at the time of FTX’s bankruptcy to determine repayment amounts. With Bitcoin’s value skyrocketing by over 370% since November 2022, some question the fairness of using outdated prices. However, this approach has been approved as part of the restructuring plan.
The impact of these repayments on the crypto market is significant, with over $2.4 billion expected to flow into the market. Some investors may choose to cash out for financial security, while others may reinvest their funds. Blockchain expert Anndy Lian has compared this situation to the Mt. Gox case, where creditors holding onto Bitcoin helped limit market volatility.
As billions of dollars are set to change hands, the aftermath of FTX’s collapse is far from over. The crypto world is on edge, anticipating the impact of these repayments on the market. Only time will tell how this will shape the future of cryptocurrency trading.