FTX Creditors Face 9%-46% Recovery Amid Crypto Market Rally

Creditors of the failed FTX exchange face significant losses despite a court-approved payout rate of approximately 143% in fiat terms, due to the skyrocketing prices of cryptocurrencies like Bitcoin, Ethereum, and Solana since the bankruptcy filing. When adjusted for current market prices, the real recovery for creditors ranges from only 9% to 46% of their original crypto value, as the dollar settlements effectively froze claims at the much lower crypto prices from late 2022. This discrepancy has caused frustration among creditors and even former FTX founder Sam Bankman-Fried, who argued that earlier repayments might have allowed customers to repurchase their assets before price surges. The FTX estate defends the dollar conversion as a legal requirement under U.S. bankruptcy law, despite its adverse effects on creditors. Additionally, some blockchain projects have begun issuing token airdrops to FTX creditors as a form of partial compensation outside the bankruptcy process, offering some hope of additional recoveries. Overall, while FTX creditors face a relatively higher recovery rate compared to other crypto collapses, their actual losses remain substantial when measured in the crypto assets they originally held.