FTX’s distribution of creditor funds is set to start in Q4 2023, with $16B in crypto assets expected to be released back into circulation.
Asset Valuation of FTX
Even after its crash and deep losses, FTX holds assets estimated to be as much as $16B. The remaining wallets of the exchange and Alameda Research were scraped and sent into custodial wallets. Some assets are still visible in the remaining FTX wallets and special bankruptcy addresses.
Reorganization and Liquidation
Claims based on creditor history and FTX balances are estimated at $16.264B. FTX spent months reorganizing and liquidating some of its assets, establishing $12B in cash reserves and sufficient stablecoins. In May, FTX issued a statement that its recovered funds were between $14.5B and $16.3B, enough to potentially repay 98% of its creditors.
Process of Fund Return
The most contentious point is that FTX continues to claim all creditors will be made whole. Unfortunately, BTC depositors on the exchange held whole coins, now trading above $63,000. FTX did not hold or keep these coins in safe custody. So, it will instead repay the monetary value of BTC at the time of the exchange’s failure, which was $16,800. The good news is FTX has finished most of the selling and liquidation, only holding a few remaining wallets of tokens and the occasional NFT. The bad news is that the process may not be straightforward and simple, and will take into account a long list of other claims and settlements.
In conclusion, despite the complexities and duration of the process, FTX's fund distribution promises substantial compensation for creditors.
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