FTX Collapse: Lessons in Crypto Risk, Repayment, and Regulation

The story of the FTX crypto exchange remains a lesson in the risks and dynamics of the crypto industry. After the dramatic collapse in 2022 and the conviction of founder Sam Bankman-Fried, the recovery is slowly progressing—at least financially.

FTX: Billions will be paid out to creditors

FTX has announced that it will begin the next round of payouts to creditors on September 30, 2025. The insolvent company had already repaid approximately $6.2 billion to aggrieved customers and creditors. This was made possible by a restructuring plan approved by the U.S. Bankruptcy Court, which governs the distribution of remaining assets.

In the wake of current developments, the so-called “disputed claim reserve”—the reserve for still-contested claims—was also reduced from 6.5 billion to 4.3 billion US dollars. This provides further clarity on how much capital is actually available for distribution.

Conviction of Sam Bankman-Fried

Former FTX CEO Sam Bankman-Fried was found guilty of seven counts, including fraud and conspiracy, in 2023 following the exchange’s collapse. The sentence: 25 years in prison—although reports suggest a reduction of up to four years could be possible for good behavior.

The FTX case remains a cautionary tale for the crypto community, not only financially but also legally and ethically. It has permanently shaken the trust of many users in centralized crypto exchanges.

Withdrawals via BitGo, Kraken and Payoneer

FTX relies on well-known partners for the technical processing of repayments: payouts are made via BitGo, Kraken, and Payoneer, among others. This is intended to ensure transparency and security for creditors.

Despite the substantial repayments, it’s clear that many investors will still only receive a fraction of their original deposits. The FTX case demonstrates the importance of risk management and careful due diligence in the crypto sector. The events surrounding FTX will continue to shape the discussion about regulation and consumer protection in the crypto market for a long time to come.

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(Featured image by Jakub Żerdzicki via Unsplash)

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