FTX will begin distributing funds to creditors in January 2025, with a court-approved plan to pay out over $6.6 billion.
Despite past scandals, the reorganization plan has been largely welcomed, as it provides a path to restoring trust and resolving creditor claims.
FTX has set January 2025 as the starting point for distributing funds to creditors and customers, marking a critical milestone in the defunct exchange’s reorganization process. However, as reported in a previous CNF update, FTX creditors might only recover 10%-25% of their cryptocurrencies, as per revised bankruptcy documents shared by Sunil Kavuri.
According to a statement by John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of the FTX Debtors:
We are pleased to announce that we will begin distributing proceeds in early 2025… While we continue to take actions to maximize recoveries, we are full steam ahead to reach arrangements with our distribution agents and return proceeds to creditors and customers as quickly as possible.
FTX is finalizing arrangements with designated distribution agents to ensure smooth execution of payouts. Eligible creditors must set up approved accounts, complete KYC verification, and submit necessary tax forms before the distribution record date.
Court-Approved Plan Promises Comprehensive Repayment
The court-approved reorganization plan will see FTX distribute over $6.6 billion, repaying some creditors over 100% of their locked funds in USD. This ambitious plan garnered support from 96% of creditors, highlighting its significance.
The first round of payouts is expected 60 days after the court’s final order in January, signaling a turning point in the long bankruptcy saga.
Scandal’s Aftermath and Road Ahead
For the record, FTX’s meteoric rise and catastrophic fall are tied to its co-founder, Sam Bankman-Fried, who misused $8 billion in customer funds. While he now faces a 25-year prison sentence, other key executives received varied terms, with Gary Wang avoiding jail altogether.
Despite the shadow of past scandals, the crypto community has largely welcomed the reorganization plan, viewing it as a step toward resolution and restoring trust in the ecosystem. Learning from early October when Bitcoin’s value rose to $64,501, as discussed in a CNF update, creditors would miss out on considerable returns if paid in cash.
At the time of writing, Bitcoin (BTC) is trading at $98,771.55, having surged by 0.96% in the past day and 9.20% in the past week.
