FTX plans to refund more than $1.2 billion to users of its former bankrupt cryptocurrency exchange.

FTX, once the world’s second-largest centralized cryptocurrency exchange (CEX), will begin paying out users who have been unable to access their funds for more than two years.

Users on the exchange must meet repayment requirements for up to $50,000 worth of digital assets by January 20.

FTX will begin repaying claims up to $50,000 after January 20, Sunil said, from more than 1,500 FTX creditors, the largest group among FTX creditors.

In a post on X on January 11, Sunil said, “January 20: FTX gave them until January 20 to fulfill the pre-distribution requirements for the first distribution. “Payments are unlikely to start before then,” he wrote.

January 20 coincides with the inauguration of US Vice President Donald Trump, raising expectations for greater clarity on crypto regulations and passage of the Bitcoin Act. This law proposes creating a Bitcoin reserve for the United States.

The new capital, along with the upcoming FTX payouts, is expected to trigger the next rally in the 2025 crypto market cycle on January 20. This could allow Bitcoin to surpass $200,000.

Users who will recover claims of up to $50,000 are the first group of investors to receive refunds under the FTX restructuring plan approved in October 2024. The plan states that 98% of FTX users will expect to receive 119% of the reported value of their funds.

However, some creditors criticized the repayment model. Because repayments will be made according to the cryptocurrency prices at the time of bankruptcy. For example, Bitcoin prices have increased by more than 370% since November 2022.

While some crypto investors expect market volatility to increase, FTX payouts are crucial to correct past losses and repair the industry’s reputation.

Anndy Lian, author and intergovernmental blockchain expert, notes that refunds will lead to mixed investor reactions:

Lian said some refunds may flow to other cryptocurrencies:

“Small investors, those severely affected by the FTX crash, may choose to sell for financial security. Those who maintain a little more long-term faith in crypto can wait by betting on future growth. “This depends entirely on individual circumstances and risk appetite.”

Lian, “Mt. Gox scenario sets a precedent, where many people chose to hold on to their coins in the hope of better days,” he added. Mt. Most Gox creditors chose to hold on to their BTC, even though it gained more than 8,500% in value 10 years after the Japanese stock market crashed.

On July 30, Mt. 41.5% of the Bitcoin distribution was completed, with a total of 59,000 Bitcoins given to Gox creditors.

Mt. Gox creditors received approximately $4 billion worth of Bitcoin, but according to a report, creditors chose to hold on rather than sell:

“Creditors preferred to buy fiat instead of BTC, which is new in Japanese bankruptcy law. Therefore, it is quite possible that only a fraction of these distributed coins will actually be sold into the market.”

The incoming $1.2 billion could be a “major liquidity event for crypto,” Philipp Zentner, co-founder and CEO of the LI.FI protocol, told Cointelegraph:

“Overall, it is a positive moment for the industry at a macro level, especially given the current market conditions, with prices currently looking like a ‘Black Friday’ sale for crypto.”

Crypto companies BitGo and Kraken announced in December that they would assist with refunds to FTX users. If all users submit full claims, the exchange is expected to pay out approximately $16 billion.