FTX will soon start making $1.2 billion in cryptocurrency payments, but here’s why it’s unfair

After more than two years of uncertainty, FTX, the once-thriving cryptocurrency exchange, is finally ready to repay more than $1.2 billion to its users. This marks the first step in its ambitious plan to return up to $16 billion to creditors, some of whom have been blocked from accessing their money since the platform collapsed.

But as the payment process begins, questions remain – how will it impact the cryptocurrency market? Are these payments fair given the significant rise in cryptocurrency prices since the bankruptcy?

Keep reading to find out what’s at stake for creditors.

What creditors must do

As part of the restructuring plan approved in October 2024, FTX will repay owed users up to $50,000 in digital assets. Creditors need to complete tasks Such as submitting tax forms and completing the Know Your Customer (KYC) verification process by January 20 to receive payments in the first round.

Did you miss the deadline? You are not excluded

Creditors who miss the January 20 deadline will still be part of future repayment rounds but will not be included in the initial distribution unless they complete the required steps.

Repayment amounts depend on cryptocurrency prices at the time FTX bankruptcy. This approach has drawn criticism, especially since bitcoin has risen more than 370% since November 2022. Some creditors question whether using those past prices is fair, given how much bitcoin’s value has changed.

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Could FTX Payouts Reverse the Mt.Gox Effect?

The upcoming repayments are expected to bring major changes to the cryptocurrency market. more $2.4 billion could flow In the cryptocurrency market, some investors may cash out for financial security, while others may choose to reinvest.

Blockchain expert Andy Lien has drawn comparisons with Jebel Jukes caseMany creditors held onto their Bitcoin rather than selling, which helped limit market volatility. A similar response from FTX’s creditors could reduce the risk of price fluctuations, potentially providing more stability to the market.

With billions on the move, the effects of the FTX collapse are far from over, leaving the cryptocurrency world on edge for what comes next.

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