FTX’s Epic $5B Payday: Who Gets What and Why You Might Miss Out 🌪️💸

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In a move that can only be described as spectacularly optimistic, the FTX Recovery Trust has decided that, starting May 30, over five billion dollars will be relocated from the realm of murky insolvency to the wallets of creditors who were probably just trying to buy pizza. Yes, that’s right—*five billion*, or roughly enough to buy an island—or at least a really fancy yacht that no one knows how to sail. 🚤

This isn’t the first time FTX has dipped into its still-surprising stash, but it’s certainly the second round of what could be politely called “reimbursement,” assuming you like your reimbursements delivered with a dash of existential dread and a sprinkle of vague promises. Because nothing says ‘financial security’ quite like being handed a percentage of what you once thought was wealth, while the firm continues its relentless, almost poetic, efforts to reimburse Those Who Were Affected by Its Collapse.

Repayment Shenanigans & Categorized Confusion

In a stroke of bankruptcy brilliance, the company’s latest communiqué on May 15 categorized creditors into five “convenience classes,” which sounds like something you’d find at a very confusing party. Some lucky creditors in Class 5A will get 72% of what they’re owed, while others in Class 5B will settle for a more modest 54%. Meanwhile, the tiny lenders and partners, classified as Classes 6A and 6B, are set to receive 61%—a number that may or may not be the second digit of a phone number you shouldn’t call. And for the cherry on this chaotic sundae, the “Convenience Claims” are to get 120%, because apparently, FTX really wants you to feel good about your peculiar claim on a fictional universe. 🍒

John J. Ray III, who sounds like a character right out of a Bateman novel, described these payments as a major milestone, emphasizing that the magnitude of the FTX creditor universe makes this process “unprecedented”—meaning even more confusing and less certain than boiling water. Of course, he also insisted that this is a sign that recovery efforts are “strong” and “focused,” which means they’re probably trying very hard not to think about the fact that the whole thing looks like a game of financial Jenga, and the tower might just fall over at any moment.

The payments will be funneled through the usual suspects—Bitgo or Kraken—within a few business days after May 30, but beware: signing up with a provider means you won’t get any cash directly. Instead, it’ll all be funneled through that provider, just to keep things interesting.

Meanwhile, the grand plan includes maneuvering through another round of creditor classes, with the hope that if the universe doesn’t implode first, total recoveries might someday reach a staggering $16.5 billion. Somewhere, a very bored accountant is plotting how to spend all that imaginary wealth.

On a slightly less optimistic note, FTX recently launched legal missile strikes against NFT Stars Limited and Delysium, aiming to recover stolen digital assets. Because nothing says “we’re on the case” like lawsuits against the very entities likely to have been part of the problem.

Valuation Method & the Fine Art of Losing Money

FTX has about $11.4 billion set aside, which is a lot of zeros but doesn’t exactly cover everyone’s heartbreak. The first wave of payouts, starting in February 2025, handed out roughly $1.2 billion to those with “convenience claims” under $50,000—probably the amount you’d be lucky to find in your couch cushions. The next wave targets the giants—those with claims over that threshold, including the serious investors who probably thought they had diversified but ended up in a financial version of a horror movie.

The plot thickens with the criticism that the valuation method is based on the crypto prices at the precise moment of bankruptcy, rendering many creditors’ claims worth less than their out-of-date, nostalgic memories of wealth. Because in the land of crypto, today’s value is tomorrow’s lost hope.

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2025-05-17 00:54