FTX Digital Markets, the Bahamian division of the collapsed crypto exchange FTX, is preparing to distribute its first round of repayments to creditors on Feb. 18. This marks a major milestone for the crypto sector following FTX’s dramatic $9 billion downfall.
The exchange’s collapse, along with over 130 affiliated entities, triggered a wave of insolvencies that prolonged the industry’s harshest-ever crypto winter, dragging Bitcoin’s price down to around $16,000.
In a step toward recovery, FTX’s Bahamas-based arm will begin reimbursing users with claims under $50,000. These payments are set to go out at 3:00 pm UTC on Feb. 18, as confirmed in a Feb. 4 post on X by Sunil, a member of the FTX Customer Ad-Hoc Committee, which represents over 1,500 affected users.
This initial payout is expected to return approximately $1.2 billion to impacted creditors.
A Positive Signal for the Crypto Market
Industry experts see the repayments as a constructive sign for the broader crypto market. Alvin Kan, chief operating officer at Bitget Wallet, noted that some of these funds could be reinvested into crypto, potentially influencing market liquidity and asset prices.
“This move could strengthen investor confidence by showcasing the market’s resilience post-FTX collapse. However, reactions may be mixed given that reimbursements are based on 2022’s lower valuations,” Kan told.
He also emphasized that beyond the financial impact, this event plays a significant role in shaping investor sentiment.
Despite the optimism, some creditors have voiced concerns over the repayment model, which calculates reimbursements based on asset prices at the time of bankruptcy. Since November 2022, Bitcoin’s value has surged over 370%, leaving many claimants receiving significantly less than they might have if payments were adjusted for current market conditions.
Justice Served, but Market Impact May Be Limited
While the first wave of repayments represents a crucial step toward resolving the FTX collapse, its overall influence on the crypto market may be moderate.
Although it may not act as a major market catalyst, the repayments symbolize a victory for affected investors and help restore trust in the industry, according to Magdalena Hristova, public relations manager at Nexo:
“The collapse affected countless investors, shaking confidence in crypto. For those without diversified holdings, these repayments offer not only financial relief but also a sense of security.”
Since this initial distribution is limited to smaller creditors, the reinvestment rate back into digital assets could be relatively low, with many recipients opting for safer investments instead.
The repayment process is still ongoing, with larger creditors awaiting further updates on their claims.
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