Once a well-known cryptocurrency company, FTX is ready to begin paying off its major creditors by the end of May. According to a latest report from Bloomberg, the cryptocurrency company is ready to start making important payments after raising $11.4 billion since the collapse.
Small creditors with “convenience claims” have already been paid, but FTX will begin paying for their major debt holders on May 30, according to bankruptcy attorney Andrew Mietdeich. FTX’s main creditors are investors who are multi-million dollar debtors, along with institutions where cryptocurrencies are stored on the FTX platform.
Large payout challenges
The 2022 collapse of FTX, once a major cryptocurrency exchange, has left a huge number of creditors behind every step. Resolving these claims quickly helps to maintain their value the most, but this process is complicated by the vast number of claimants resulting from the downfall of the exchange.
What’s even worse is that since FTX’s bankruptcy, Bitcoin has increased its value more than four times, increasing the frustration of many former customers who wanted to pay it back on digital assets rather than cash.
As FTX handles a large number of suspicious claims, it takes time to repay all creditors. Attorney Andrew Cietderich explained that some of these claims could be inconsistent with the “know client” (KYC) rules FTX requires to verify the identity of creditors. Other billing may not be effective at all, but it makes them a more complicated and time-consuming process.
27 Quintilion’s claim!
Interestingly, FTX handles an overwhelming number of bills, with a total of “one-twenty-seventh quarters.” One quarter was followed by 18 zero, 100 million times the number, or 1 billion times the number. In bankruptcy cases, lawyers usually exclude duplicate, inflated, or false claims after the payout plan is approved by a judge. FTX faces these flawed billions of claims, Mietderich said.
FTX must pay it quickly to legitimate creditors as the interest earned on $11.4 billion is lower than the 9% fee earned while waiting for payment. FTX filed for bankruptcy in November 2022 after the crypto platform was shut down and handed over to Insolvency experts. Court approval for the October payment plan.
