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Summary: The start of FTX creditor repayments on February 18 marked a significant milestone in the aftermath of the exchange’s collapse, with financial and emotional consequences for those affected.
The long-awaited repayments for FTX creditors began on February 18, representing an important step in the ongoing resolution of the exchange’s bankruptcy. Many creditors, who had lost savings meant for housing and their children's education, faced severe financial hardships after the collapse.
Creditors with claims under $50,000—classified as the “Convenience Class”—will receive 100% of their claims plus 9% annual interest, calculated from asset valuations as of November 11, 2022, the day FTX filed for bankruptcy. However, financial losses are not the only consequences.
“Our life savings were stolen overnight. We had saved for houses, our children’s education. Many fell into depression and experienced panic attacks. I personally know of at least three suicides,” shared Sunil Kavuri, an affected creditor. He noted that many FTX creditors were forced into debt, taking out loans to cover daily expenses.
In response to the crisis, victims banded together to support one another and help navigate the complicated bankruptcy process. “I went through similar psychological struggles, but after a week, I felt the need to act. I reached out to other FTX creditors and created a support community,” Kavuri added. “Others joined, and we helped fellow creditors understand the opaque bankruptcy process and supported each other emotionally.”
FTX’s collapse also led to increased regulation of cryptocurrency exchanges in the U.S., including restrictions on banking services for crypto companies. Amid the uncertainty, many creditors opted to sell their claims, and by the end of 2022, more than 10,000 such claims were listed on specialized platforms.
“About 50% of creditors sold their claims. Beyond needing liquidity, many wanted to move on from the prolonged bankruptcy process and regain access to their funds,” Kavuri noted.
Additional complications arose over the debate on whether repayments should be made in crypto or fiat currency. Since November 2022, cryptocurrency prices have surged significantly, meaning the lost tokens would now be worth much more. For example, Bitcoin (BTC) was valued at around $16,000 at the time of FTX’s bankruptcy, while today, it exceeds $95,000.
This experience has reinforced the importance of carefully assessing risks when using centralized exchanges and the necessity of diversifying digital asset storage. Many creditors and community members have learned critical lessons about decentralization and the need for personal control over funds in the crypto ecosystem.
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