FTX creditors' payouts to begin January 2025 under court-approved reorganization plan.
Customers must fulfill KYC and tax forms to receive over $6.6B in distributions.
Payouts to be in cash, not crypto, with repayment expected to exceed 100% of locked funds.
The FTX Derivatives Exchange has announced a specific timeline for its reorganization plan, confirming that creditor distributions are set to begin in January 2025.
This development signals progress in the exchange’s long journey through bankruptcy proceedings and provides creditors with a clearer understanding of when they can expect payouts.
The announcement follows the courts' approval of FTX's reorganization plan, signaling a formal kickstart to the repayment process.
FTX has outlined that the official reorganization plan will pave the way for customer and creditor payouts, with preparations already underway. As announced, before initiating the January 2025 timeline, the exchange will finalize arrangements with specially designated distribution agents.
The distribution process is expected to commence approximately 60 days after court approval of the reorganization plan.
To be eligible for the distribution, customers must create an approved account with the assigned distribution agents. FTX will provide specific details and dates regarding the payout in due course, subject to a court order.
Moreover, creditors must complete compliance requirements, including verifying their Know Your Customer (KYC) status and submitting required tax forms before the distribution record date.
The court approved the reorganization plan in October, and FTX has set its sights on distributing over $6.6 billion to customers. The plan received support from about 96% of all creditors, highlighting its wide acceptance.
One notable aspect of the approved plan is the intention to repay users more than 100% of their locked funds, with payments to be made in USD.
Some key stakeholders have expressed concerns over this payout method, noting that creditors will not receive repayments in cryptocurrencies but rather in cash, which could impact the original value of funds held.
FTX's announcement regarding its reorganization plan follows a series of major developments in the firm's downfall. FTX Derivatives Exchange was once regarded as one of the fastest-growing platforms in the cryptocurrency trading industry.
However, its trajectory turned downward when it was discovered that co-founder and former CEO Sam Bankman-Fried (SBF) had created unauthorized means to divert approximately $8 billion of customer funds for unrelated purposes.
Bankman-Fried was sentenced to 25 years in prison for his role in the fraudulent activities that led to the company's downfall. Other executives involved, including Ryan Salame and Caroline Ellison, received prison terms of 7.5 years and 2 years, respectively.