FTX Repays $5 Billion in Second Round as Market Eyes Altcoin Season

Bankrupt crypto exchange FTX has kicked off its second round of repayments to creditors, disbursing over $5 billion to individuals and entities with approved claims.

This follows the firm’s initial payout of $1.9 billion and marks a major step in the collapsed exchange’s bankruptcy proceedings.

Will FTX Payout Spark a Potential Market Rally?

In a May 30 update, the defunct firm confirmed that the second round of distribution targets eligible claims in the Convenience and Non-Convenience Classes that have met the necessary pre-distribution conditions.

“This represents continued progress returning cash to FTX’s customers and creditors. I am proud of the outstanding success of the recoveries to date. Our work continues on recovering more for creditors and resolving outstanding claims,” John Ray III, FTX CEO, said.

The exchange furthered that payouts began the same day and are expected to be completed within one to three business days. BitGo and Kraken are handling the distribution.

Sunil Kavuri, a prominent FTX creditor advocate, shared that Kraken began processing FTX US distributions on May 30, with international disbursements scheduled for June 2. The total for US claims stands at $312 million, of which $168 million belongs to claims over $50,000.

Meanwhile, FTX creditors are receiving varying amounts depending on their classification.

The exchange pointed out that customers with Dotcom Entitlement Claims are receiving 72% of their eligible funds, while those under US Customer Entitlement Claims receive 54%.

Convenience Claimants, typically with smaller balances, will receive 120% of their initial claims. In addition, roughly 61% of General Unsecured and Digital Asset Loan Claims will also be repaid during this phase.

Meanwhile, FTX has also issued a security notice warning users of rising phishing scams tied to the payout process. The exchange urged all claimants to remain vigilant and verify communication sources before taking any action.

This is because several industry analysts are watching the distributions closely and are predicting a potential uptick in crypto trading activity. Since much of the payout will be in stablecoins, recipients may quickly reallocate funds into other digital assets.

Market analyst Miles Deutscher believes this liquidity could act as a short-term catalyst for altcoins, especially as investor sentiment improves.

Researchers at Coinbase also echoed this view. They suggested that institutional recipients may look to re-enter the market, especially as regulatory clarity improves across key jurisdictions.