FTX is finally repaying creditors after collapsing in 2022. The first to receive funds are Convenience Class creditors, those with claims under $50,000.
They will get back the full amount plus 9% annual interest. While this is a step forward, the repayments are based on 2022 prices, leaving many feeling they are receiving far less than what their assets would be worth today.
Some believe this could bring fresh liquidity into crypto markets, while others argue the impact will be too small to matter.
FTX Repayments and the Solana Unlock
FTX will begin repaying creditors on February 18, starting with smaller claims that total around $1.2 billion.
Larger creditors, those owed more than $50,000, may receive up to 175 % of their claims later this year.
The repayment process is being managed by BitGo as part of FTX’s reorganisation plan, which requires all distributions to be completed within 60 days of its approval in January.
Despite the repayments moving forward, many in the crypto community are frustrated by the valuation method.
Bitcoin holders, for example, are being reimbursed based on its November 2022 price of around $20,000, even though it is now trading close to $98,000. Solana has also surged from $22 at the time of FTX’s collapse to over $180, leading to even greater losses for creditors who held SOL.
At the same time, FTX is preparing to unlock 11.2 million SOL worth about $2.06 billion on March 1.
This follows a series of bankruptcy auctions where 41 million SOL were sold off. Galaxy Digital secured the largest share, buying 25.52 million SOL at $64 per token. Since then, Solana’s price has increased significantly, allowing early buyers to see major returns.
Some investors believe the upcoming unlock could add momentum to Solana’s price, while others worry about the market absorbing the additional supply.
Will Repayments Affect the Crypto Market?
As billions of dollars return to creditors, there is speculation about whether the money will find its way back into crypto.
Some believe smaller creditors, who may not have immediate financial needs, could reinvest their repayments into assets like Solana.
Mena Theodorou, co-founder of Coinstash, expects some of these funds to flow into SOL, given its strong growth over the past year and FTX’s previous ties to the token.
Not everyone is convinced that repayments will have a significant impact. Markus Thielen, founder of 10x Research, points out that while FTX is distributing around $10.5 billion to larger creditors, only about $7 billion could realistically be reinvested into crypto.
Even if half of that enters the market, the net inflow would be just over $3 billion, roughly the same as Bitcoin’s average monthly inflows.
Another factor to consider is whether creditors will reinvest their repayments. Many have been waiting for over two years and may choose to cash out instead.
The frustration over the 2022-based valuations could also lead to more creditors opting to hold their funds in fiat rather than returning to the market.
This makes it difficult to predict whether repayments will bring meaningful price movement or simply act as a long-awaited financial resolution for affected users.
Conclusion
FTX’s repayments mark an important moment for creditors who have been waiting since the exchange’s collapse. While some funds could make their way back into crypto, the overall market impact is uncertain.
The decision to compensate creditors based on 2022 prices has left many feeling frustrated, dampening the positive sentiment surrounding the repayments.
Whether this leads to fresh momentum in the market or remains just another chapter in FTX’s long-running collapse will depend on how creditors decide to use their funds.