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FTX to Begin $1.2 Billion Payouts—A Step Toward Recovery

Key Points:

  • FTX plans to pay $1.2 billion to creditors starting after January 20.
  • Creditors owed up to $50,000 are first in line for repayments.
  • Some expect the funds to flow back into the crypto market, boosting activity.
  • Debate surrounds the repayment method, tied to 2022 cryptocurrency values.
  • The move is seen as part of a larger effort to rebuild confidence in crypto.

Creditors of FTX, once one of the biggest cryptocurrency exchanges in the world, may finally get a slice of what they’re owed. After over two years of uncertainty, the company is set to begin repayments totaling $1.2 billion.

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The first group of creditors, those owed up to $50,000, have until January 20 to complete their claims. The timing coincides with the inauguration of Donald Trump, a date many in the industry are watching closely.

Could This Trigger a Crypto Comeback?

There’s plenty of speculation about what these repayments might mean for the broader crypto market. Some think a chunk of the money could flow back into digital assets, especially as Bitcoin and other cryptocurrencies continue to show strong growth potential for 2025.

But the reactions could vary. People who were hit hardest by FTX’s collapse might choose to cash out for financial stability. On the other hand, those more confident in the long-term future of crypto might reinvest their funds.

“It really depends on each person’s situation,” said blockchain consultant Anndy Lian. “Some creditors will see this as a way to recover and move on, while others might hold onto their assets, expecting even bigger gains down the line.”

The Controversy Over Valuations

Not everyone is thrilled about how FTX is handling the repayments. The company is basing its payouts on the value of cryptocurrencies at the time of its bankruptcy in 2022. That’s a sore point for some creditors, especially since Bitcoin’s price has soared more than 370% since then.

https://twitter.com/TU_Crypto_News/status/1878755031811526741

Still, the plan, approved in October 2024, aims to pay back creditors as quickly as possible. For many, especially those in the first group of claimants, it’s a chance to finally move forward after years of waiting.

Learning From the Mt. Gox Saga

FTX’s situation isn’t the first time creditors have faced tough choices after an exchange collapse. The Mt. Gox case is a well-known example. Many creditors there decided to hold onto their Bitcoin, even as its value skyrocketed over the years.

Something similar could happen here. Crypto firms like BitGo and Kraken are already involved in managing the distributions. If everything goes smoothly, FTX could eventually repay as much as $16 billion.