FTX Repayments Process Begins — Users Will Receive Funds in 60 Days

Highlights:

• FTX starts repayments of funds to creditors under the Chapter 11 plan.
• Users with claims under $50,000 will receive payments first, and 98% will get funds.
• Creditors must meet the January 20 deadline to qualify for the first round of payments.

FTX started distributing funds on January 3 to creditors under its Chapter 11 reorganization plan. This marks a key step for creditors awaiting their funds after the exchange’s November 2022 collapse. 

The FTX estate, which handles the bankruptcy proceedings of the collapsed crypto exchange, estimates that the total distribution will be between $14.7 billion and $16.5 billion. The FTX plan states that an initial group of “convenience classes” will be the first to receive repayments. This includes users with claims of $50k or less. The plan, approved in October, indicated that 98% of FTX users can expect to receive 119% of the declared value of their funds.

The FTX Debtors Plan of Reorganization is effective today, January 3, 2025. Today is also the initial distribution record date for holders of allowed claims in the Plan's Convenience Classes. Separate record and payment dates for other classes of claims will be announced later.

— FTX (@FTX_Official) January 3, 2025

Sunil Kavuri, a key advocate for FTX creditors, explained that creditors with claims above $50,000 will receive a portion of a separate $10.5 billion pool. The distribution process for this group will take more time.

Important: FTX Distribution

3rd Jan 25: Initial Distribution Record Date
Feb/Mar 25: Convenience class holders <$50k = $1.2bn (119% paid within 60 days of today)

> $50k = $10.5bn

FTX customers need to complete

1) KYC
2) Complete W-8 Ben form
3) Onboard with distribution… pic.twitter.com/43ZfirJNX3

— Sunil (FTX Creditor Champion) (@sunil_trades) January 3, 2025

Customers must file a claim through the official website to be eligible for reimbursement. FTX stated that the first group should receive their reimbursement within 60 days. Holders of allowed claims have until January 20 to meet pre-distribution conditions. These conditions include filing tax forms, selecting a Distribution Service Provider, and completing sanctions checks. They will exclude submissions made after the deadline from the initial distribution. However, they will be considered in subsequent distributions.

FTX Customer Portal and Payment Options

FTX launched a Customer Portal where creditors complete an eight-step process. Step 8 involves selecting a Distribution Service Provider. Currently, there are two providers, Kraken and BitGo, each with specific jurisdictions. 

Kraken and BitGo support multiple fiat and crypto options. Creditors can withdraw funds in U.S. dollars or request conversion into digital assets. For FTX US residents, BitGo offers stablecoin purchases, ACH transfers, and wire transfers. Kraken provides similar services, along with SWIFT and SEPA options, based on regional rules.

FTX’s CEO, John J. Ray III, has expressed optimism about the repayment plan, stating, “We are well positioned to begin executing the distribution of recoveries back to all customers and creditors.”

FTX Creditors to Receive Payments Based on 2022 Asset Values

In the repayment process, creditors will receive amounts based on the value of their assets at the time of FTX’s collapse in November 2022. For example, Bitcoin was valued between $15,000 and $17,000 then, much lower than its current price of about $100,000. FTX’s distribution timeline is faster than that of previous cryptocurrency cases. For example, Mt. Gox customers, whose exchange collapsed in 2014, are still waiting for payments after over ten years.

The exchange declared bankruptcy in November 2022. This unraveled a high-profile fraud scheme. Several executives received prison sentences. Former CEO Sam Bankman-Fried is serving a 25-year prison term. Rumors suggest that Bankman-Fried may receive a potential presidential pardon. This stems from his role as a major donor to the Democratic Party during the 2020 election.