FTX, the collapsed cryptocurrency firm, will begin distributing $11.4 billion to its main creditors starting May 30, bankruptcy attorney Andrew Dietderich told U.S. Bankruptcy Judge Karen Owens in Wilmington, Delaware. The long-awaited payout follows FTX’s 2022 implosion, which left investors and institutions with millions in losses.
The company has already started paying holders of “convenience claims,” classified as minor creditors. The upcoming distribution will target FTX’s largest claimants—primarily major investors and institutions that had digital assets stored on the exchange.
FTX filed for Chapter 11 bankruptcy in November 2022 and has since amassed a substantial cash reserve. However, Dietderich warned that processing all claims could take time due to the volume and complexity of disputes. He cited a staggering “27 quintillion” claims, an astronomical figure inflated by duplicates, fraudulent demands, and errors.
Billions in Flawed Claims
Dietderich emphasized that “billions” of the claims are specious. Many of them are expected to be invalidated during post-approval legal proceedings. Some conflict with “know your customer” (KYC) regulations, which require the firm to verify each creditor’s identity. Others involve payment demands that are not legally enforceable.
“These are claims that we think are specious,” Dietderich said. He added that the volume has slowed efforts to execute payments efficiently.
The claims review is not just a logistical hurdle—it also has financial consequences. Dietderich noted that creditors are accruing interest at a 9 percent annual rate while they await payouts. In contrast, FTX is earning a much lower rate on the $11.4 billion cash reserve, placing pressure on the company to expedite distributions.
Asset Valuation Frustrates Creditors
The payout will be made in U.S. dollars, not digital assets. This decision has become a source of frustration for former customers, as Bitcoin has more than quadrupled in value since the bankruptcy. Many had hoped to be repaid in cryptocurrency to reflect current market prices.
FTX’s payout plan received court approval in October. The company, now under the management of insolvency experts, aims to preserve value by resolving valid claims quickly while filtering out inflated ones. The case—FTX Trading Ltd., 22-11068—is being handled by the U.S. Bankruptcy Court for the District of Delaware.
As creditors await the May 30 disbursement, lawmakers have focused on regulatory accountability. Senator Elizabeth Warren raised concerns about Paul Atkins, a candidate for SEC Chair, whose firm Patomak Global Partners advised FTX in 2022. Warren warned of potential conflicts of interest if Atkins is confirmed.
