FTX has begun phase 2 of compensation payments with over $5 billion

Background of Phase 2 Payment

FTX, once one of the leading cryptocurrency exchanges, collapsed in November 2022 after it was discovered that it had misused customer funds to cover losses at its sister company Alameda Research. The incident cost customers and creditors an estimated $8 billion to $10 billion, leading FTX to file for Chapter 11 bankruptcy in the United States. Under the leadership of John J. Ray III, the FTX Recovery Trust has been working to recover assets, including cash and digital assets, and sell investments such as shares in AI startup Anthropic, to create a compensation fund.

Phase 1 of the compensation plan began in February 2025, focusing on creditors with claims under $50,000 (the “Convenience Class”). Approximately $1.2 billion was distributed during this phase, with repayment rates of up to 118-120% of the value of the claim, including 9% interest per year starting in November 2022. Phase 2, which began on May 31, 2025, expanded to larger claims, including individual and institutional investors with claims exceeding $50,000. In total, FTX expects to distribute $14.7-16.5 billion across the entire plan, with Phase 2 accounting for more than $5 billion.

Phase 2 payment details

According to the announcement from FTX Recovery Trust, Phase 2 will distribute over $5 billion through two designated platforms, BitGo and Kraken. Eligible creditors who have completed pre-distribution requirements such as KYC (Know Your Customer) verification, tax filing, and registration with one of the two platforms, will receive the funds within 1-3 business days from 15:00 UTC on May 31, 2025. The repayment rate is determined in order of priority in FTX's reorganization plan as follows:

• Dotcom Customer Claim (Class 5A): Receive 72% of the claim value.

• US customer claim (Class 5B): Receive 54% of the claim value.

• General Unsecured Claims (Class 6A) and Digital Asset Loan Claims (Class 6B): Receive 61% of the claim value.

• Convenience Class (Class 7) Claims: Receive 120% of the claim value, primarily for smaller claims.

The payments are based on the USD value of the assets at the time of FTX's bankruptcy (November 2022), when Bitcoin's price was only around $17,000, compared to over $100,000 today.

This has been controversial, as creditors have not benefited from the strong rally in the cryptocurrency market since then.

Impact on the Cryptocurrency Market

FTX's Phase 2 Payments Could Have Significant Impact on the Crypto Market:

• Buying or Selling Pressure: With over $5 billion being distributed, some of this could be reinvested by creditors into digital assets like Bitcoin and Ethereum, creating buying pressure and driving prices up.

• Posts on X suggest bullish sentiment, with many predicting that the influx will fuel a bull run. “Over $5 billion in stablecoins will enter the market starting May 30, when Bitcoin is above $104,000 and Ethereum is surging.” Conversely, if creditors choose to convert to fiat, the selling pressure could temporarily depress prices.

• FTX’s partnership with reputable platforms like BitGo and Kraken to distribute the compensation fund represents progress in the crypto industry’s infrastructure, which could bolster investor confidence in regulated exchanges and custodial services.

Conclusion and evaluation

FTX’s Phase 2 settlement, which begins at 15:00 UTC on May 31, 2025 and is worth over $5 billion, is a major step in addressing the aftermath of the historic bankruptcy. Not only will it provide financial relief to creditors, it will also have the potential to reshape confidence in the cryptocurrency market.

However, the asset-based payouts from 2022 have been controversial, highlighting the challenge of balancing regulatory compliance and investor expectations. With the support of BitGo and Kraken, and the continued efforts of the FTX Recovery Trust, this compensation process could pave the way for a sustainable recovery in the crypto industry, while also creating notable market volatility in the short term.

Once again we give our opinion on potential projects in the crypto market. This is not investment advice, consider your portfolio. Disclaimer: The views expressed in this article are solely those of the author and do not represent the platform in any way. This article is not intended to be a guide to making investment decisions.

Compiled and analyzed by HCCVenture

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