FTX started paying back large creditors at the end of May

FTX, the once-renowned cryptocurrency company, is set to pay its major creditors by the end of May. After raising $11.4 billion since its collapse, the company is preparing to begin making large payments.

While small creditors with "convenience claims" have been paid, FTX will begin paying large creditors on May 30, according to bankruptcy attorney Andrew Dietderich's announcement to the supervising judge of the case. The main creditors of FTX are investors to whom the company owes millions of dollars, along with cryptocurrency custodians on the FTX platform.

Challenges with large payments

The collapse of FTX in 2022 suddenly turned many people from all walks of life into creditors. Although quickly resolving claims will help preserve maximum value, the process is complicated by the enormous number of claims.

What makes the situation even more tense is that Bitcoin has increased in value more than four times since the collapse of FTX, leaving many former customers feeling disappointed as they hoped to be paid in digital assets instead of cash.

The payment process for all creditors will take a long time, as FTX is currently facing a large number of unclear claims. Lawyer Andrew Dietderich explained that some of these claims may conflict with KYC regulations, forcing FTX to verify the identity of the creditors. At the same time, some other claims may be invalid, complicating and prolonging the resolution process.

27 trillion trillion trillion requests

It's interesting, FTX is facing a huge number of requests, totaling up to "27 trillion trillion trillion (27.000.000.000.000.000.000.000)", according to Dietderich.

In bankruptcy cases, lawyers often filter out duplicate, exaggerated, and false claims after the payment plan is approved by the judge. According to Dietderich, FTX is facing billions of such erroneous claims.

FTX needs to quickly pay its legitimate creditors because the interest they are earning from $11.4 billion is lower than the 9% rate that creditors receive while waiting for payment. FTX filed for bankruptcy in November 2022 after its cryptocurrency platform was shut down and handed over to bankruptcy experts. The company was approved by the court for its repayment plan in October.

Atkins is suspected of having a connection with FTX

U.S. lawmakers questioned Paul Atkins, who is said to be the candidate for Chairman of the Securities and Exchange Commission (SEC), about his relationship with the bankrupt exchange FTX, while criticizing the agency's former Chairman Gary Gensler.

Notably, FTX hired Patomak Global Partners – associated with Paul Atkins as an advisor in 2022. Senator Elizabeth Warren raised concerns about potential conflicts of interest if Atkins is confirmed as SEC Chairman, due to his firm's past relationships with FTX.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do thorough research before making any decisions. We are not responsible for your investment decisions.

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Minh Anh

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