False rumors spread about FTX distributing funds from October 1st.
$16 billion inflow to crypto is inaccurate; hearing scheduled for October 7th.
About $5.5 billion in claims bought; likely won’t return to crypto markets.
Most large claims to see recovery through 2025; final distribution could stretch into 2027.
False Rumors: No FTX Distribution Yet
In recent days, large accounts have been spreading misleading information that the FTX bankruptcy distribution had started on October 1st, or was about to begin shortly after. These claims have been causing confusion in the market, especially with talk of a $16 billion inflow into the crypto space. However, these rumors are completely false.
The real situation is that FTX’s ongoing bankruptcy process has not yet reached the point of asset distribution. A key hearing is scheduled for October 7th, which will provide more clarity on the next steps for the company’s liquidation plans and claims processing. While there is optimism among some creditors, the timeline for distribution is still not fully defined, especially for smaller claims.
How Much and When? A Breakdown of FTX Claims
Approximately 50% of FTX’s estimated $5.5 billion in claims have been bought up by third parties. Notably, these claim buyers are not traditional crypto investors and are unlikely to reinvest their returns into the cryptocurrency market. This dispels the idea that there will be a massive capital inflow into crypto when the funds are finally distributed.
The smaller claims, those valued at less than $50,000, might see a full distribution by the end of 2024, depending on how quickly the bankruptcy court can process them. For larger claims, which make up the bulk of the $5.5 billion in assets, the timeline is more extended. Some projections indicate that 70% to 100% of the petition date value could be returned by Q1 or Q2 of 2025.
For original claim holders and those who purchased claims, if 100% recovery is reached, both parties could recover up to $5.5 billion each. The remaining balance will be paid out in smaller installments over the next 2 to 3 years, extending the timeline for full recovery to 2027 or later.
What’s Next?
October 7th’s hearing will be crucial in outlining the path forward, and it will also help to set expectations for when distributions might actually begin. Investors and creditors alike should remain cautious about any information that isn’t directly from official FTX sources, as false rumors can easily mislead market participants.
Stay updated on the latest developments in the FTX case, as it remains one of the most closely-watched bankruptcies in the crypto industry.
