FTX Creditor Repayments Begin, But Controversy Brews Over Market Price Adjustments

The long-anticipated creditor paybacks for FTX, one of the largest and most contentious cryptocurrency bankruptcies of all time, started on February 18, 2025.

They kicked off with what was described as “a first phase,” which is focusing on smaller claims and which at least 10,000 people should expect to receive partial payments from. A total of $1.2 billion is set aside for what FTX’s very recent bankruptcy court filing in Delaware calls “early payouts to certain creditors.”

In late 2022, following a dramatic collapse, FTX filed for bankruptcy. Since then, the company has been working through an attempt to reorganize itself. On January 3, 2025, it began to pay out some of its debts. The bankruptcy court has prioritized the repayment of certain claims; those of smaller creditors have been designated as first in line. FTX set aside $1.2 billion to pay off this round of claims.

The plan to repay the $16 billion is designed to take place in several phases. Yet, it is by no means a simple scheme. Half of this amount—$8 billion—will be withheld for the inevitable disputed claims that will surface, and may well take several years to settle through the courts. And larger, as yet unspecified claims, are expected to receive 175% of their original value. But those payments, like the rest of the claims process, are on the unsteady timeline of a prearranged legal system—meaning that they’re likely to drag on and may well wind up in court.

Crypto custodian BitGo has been tasked with managing the distribution of funds to ensure that payouts are completed within 60 days of the effective date of the reorganization plan. Reorganization Plan in Chapter 11 proceedings are used for managing large-scale and complex bankruptcies like FTX’s. In such cases, payees and their amounts can run into the thousands, so the use of a third-party paymaster is a good idea for transparency and fund distribution.

A major controversy has arisen related to the method of valuation of assets for creditor payouts, a controversy that goes to the very heart of the structured repayment plan. FTX has chosen to use the market prices from November 2022—the very month the exchange came crashing down—for its creditor payouts. Many creditors are understandably upset with this decision, and with good reason. If the payout plan is going to be based on valuation at a particular point in time, using the time of the exchange’s collapse for that moment of valuation hardly seems fair, especially to creditors of cryptocurrencies whose values have rebounded since that November carcass.

Among the most outspoken critics of FTX’s decision to peg the repayment price at $20,000 per Bitcoin are the holders of that cryptocurrency. At present, Bitcoin trades for an astonishing $97,988. These creditors would now prefer a bankruptcy trustee to sell their part of the estate’s assets at current prices, rather than at the price that FTX set before it imploded. Selling when Bitcoin was worth just $20,000 would have translated into a $14,000 loss per coin, a loss that has sparked accusations of treating creditors like second-class citizens and failing to recognize the massive rise in value that cryptocurrencies have enjoyed since FTX’s collapse.

By the same token, holders of Solana (SOL) also feel the pain of the repayment process. Following the downfall of FTX, Solana’s price skyrocketed over 700%, climbing from roughly $22 to well over $180 per coin. Consequently, creditors are receiving payouts based on the “much lower valuation of Solana around the time of FTX’s bankruptcy.” And this is where the ire of affected crypto holders really comes to a head. After all, payouts should bear some resemblance to current conditions, no? .

Besides the constant payment, there is another important upcoming event for FTX’s creditors. The exchange is primed to release an enormous 11.2 million Solana tokens—a sum presently approximated to be worth around $2.06 billion—on March 1, 2025. This release is poised to be among the largest single-token drops in FTX’s pool of bankruptcy estate claims and could substantially affect not just the price of Solana, but also have effects rippling outward through the entire crypto sector. And if you’re one of the creditors holding Solana, this development may provide some measure of relief.

The continuous saga of repaying FTX creditors moves forward, with many people questioning whether the initial payouts will make the resolution fairer and more transparent. Using November 2022 prices for the payouts seems to be the main point of contention, and many affected people feel they are being shortchanged as a result. Here’s what the situation looks like right now:

1. Small creditors may get some relief with the first $1.2 billion in repayments.

2. Large claims, however, are likely to wait until sometime in 2025 for the full distribution.

The next release of Solana tokens also brings up how the market will respond. Some creditors might be helped by this release, but others might feel that the timing of this unlock is just too late to save them from their losses. Regardless of who gets what in the way of repayment, one thing is for certain: FTX is, and will remain, a touch point for the crypto community to debate fairness and the effectiveness of the repayment plan now serving as the blueprint for resolving other crypto crises.

At present, the clock counts down as FTX labors to pay off its gigantic debts. The company seems to be on the path to pay back something, but whether they will pay back as much as they actually owe remains to be seen. If they return some to creditors, but not all, will they be free of further legal entanglements? And if they pay back almost all they owe, will we be revisiting any of these follies in a courtroom?

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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