Bankrupt cryptocurrency exchange FTX is facing fresh scrutiny from users fighting for at least $2.2 billion worth of disputed claims still pending approval, with numerous creditors continuing to struggle to get their repayments approved.
The FTX Recovery Trust started its second round of payments on May 30, repaying over $5 billion worth of digital assets to eligible creditors who have completed pre-distribution requirements.
Still, at least $2.25 billion worth of repayments remain in dispute, according to estimates shared by Sunil, FTX creditor and Customer Ad-Hoc Committee member.
“Current allowed claims: $7.5bn. Total Estimated allowed claims: $10.6bn. 30% of allowed claims are disputed – legit claims will be allowed,” Sunil wrote in a June 11 X post.
The FTX estate holds an additional $6.5 billion worth of reserves for disputed claims, which are likely to be paid at the next distribution, Sunil told Cointelegraph, adding:
“I foresee most of the disputed [claims] getting allowed for the next distribution.”
“However, there is much uncertainty regarding the Chinese claims, which made up 8% of claims on the bankruptcy,” Sunil said, adding that it is difficult to predict a timeline for these payments until a distribution provider supporting China is announced.
Cointelegraph has reached out to FTX for comment regarding the timing of the next repayment round and clarification on the outstanding claims.
The first round of FTX creditor payments saw $1.2 billion distributed to recipients with claims of less than $50,000 on Feb. 18.
The news comes a day after FTX partnered with a third payment distribution service provider. On Tuesday, FTX added Payoneer as its third distribution partner alongside BitGo and Kraken. Payoneer provides cross-border payment services in over 190 countries and is expected to assist primarily with retail customer payouts.
FTX creditors struggle with KYC verification
Multiple FTX creditors have reported issues when completing their Know Your Customer (KYC) verification process for the repayments.
“Any info on bahamas kyc pending? No response for 5 months,” wrote X user Big Penger, in a June 11 response.
“I’ve been requested multiple evidence of my source income. I feel like I’m on trial and I can’t really understand why they are so interrogative,” said FTX creditor Sal Wins, adding that his claim is less than $5,000.
Some crypto investors have speculated that the full extent of the FTX repayments may bring a significant sentiment and liquidity boost, which may provide more upside for the cryptocurrency market.
- Disputed Claims: $2.25 billion in FTX creditor claims are still disputed.
- Second Round of Payments: The FTX Recovery Trust began its second payout round on May 30.
- Additional Reserves: The FTX estate holds $6.5 billion in reserves for disputed claims.
- KYC Issues: Many creditors are facing problems with the KYC verification process.
- New Partner: FTX has partnered with Payoneer to facilitate payouts.
Why It Matters
The ongoing struggle to resolve these disputed claims highlights the complexities and challenges of bankruptcy proceedings, especially within the crypto space. The efficient resolution of these claims is crucial for restoring confidence in the market. The longer the delays, the greater the frustration among creditors, which could negatively impact overall market sentiment.
Market Impact
The potential injection of over $2 billion back into the crypto market could provide a significant liquidity boost. If creditors reinvest a portion of their recovered funds, it could lead to increased buying pressure on various cryptocurrencies. However, the impact will depend on the creditors’ decisions and the overall market conditions at the time of distribution.
Expert Take or Personal Insight
The FTX saga continues to cast a long shadow over the crypto industry. While the repayment process is a positive step, the delays and KYC issues are concerning. It’s crucial for regulatory bodies to learn from this situation and develop clearer guidelines for handling bankruptcies in the crypto space. The uncertainty surrounding the Chinese claims also warrants close attention.
Actionable Insight
For traders and investors, it’s important to monitor the progress of the FTX repayment process. Keep an eye on announcements regarding the next distribution date and any updates on the resolution of disputed claims. Be aware that a significant influx of funds into the market could create volatility and potential trading opportunities.
Conclusion
The FTX bankruptcy case is far from over, but the ongoing repayment efforts offer a glimmer of hope for creditors. While challenges remain, the successful resolution of these disputed claims could contribute to the overall recovery and maturation of the cryptocurrency market. Stay informed, exercise caution, and be prepared for potential market fluctuations as this story unfolds.