FTX Utilizes $11.4 Billion on May 30 to Repay Institutional Creditors and Other Debtors, Delays in Repayment Progress Due to Debts and KYC Disputes
FTX Announces Use of $11.4 Billion Cash Reserves to Repay Major Creditors
FTX, the renowned exchange, announced that it will use $11.4 billion in cash reserves by the end of May this year to repay major creditors. However, FTX is currently facing issues related to creditor disputes and Know Your Customer (KYC) verification, making it uncertain when the repayment will occur.
Small Creditors Have Started Receiving Payments; Major Creditors to Begin Compensation on 5/30
According to Bloomberg, Andrew Dietderich, the lawyer responsible for the FTX bankruptcy case, stated that FTX will initiate the first wave of repayment actions for “major creditors” on May 30, which includes institutions and large holders with significant assets on the platform.
Meanwhile, small creditors classified by FTX as Convenience Claims have begun to receive payments.
Ineligible Creditors Number in the Billions, Slowing Down Repayment Speed
Currently, FTX has recovered approximately $11.4 billion in cash during the liquidation process. However, Dietderich indicated that the number of creditor claims has reached up to 27 trillion, among which:
- Duplicate claims for compensation
- Inflated claims
- Ineligible fake creditors not meeting KYC requirements
The number of ineligible claims amounts to billions, requiring filtering and verification, which in turn slows down the repayment process.
Delays Increase Interest Costs, Prompting FTX to Accelerate Repayment Operations
Regarding the reasons why FTX wants to expedite repayment, Dietderich explained that the interest earned on FTX’s $11.4 billion cash reserves does not keep pace with the daily interest costs accrued from outstanding debts.
This means: “If FTX has not repaid its debts, creditors are entitled to receive an additional 9% interest compensation each year.” Therefore, the longer the delay, the greater the losses incurred.
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