FTX and its affiliated debtors have confirmed that their Chapter 11 reorganization plan, approved by the U.S. court, will become effective on January 3, 2025. The first round of distributions to creditors is expected to occur within 60 days of the effective date of the plan.
The company has announced agreements with BitGo and Kraken to facilitate the distribution process.
FTX Creditors Will Finally Receive Funds in 2025
According to the official notice, FTX has outlined a timeline for initial repayment of creditors more than two years after filing for Chapter 11 bankruptcy. The first group of eligible claim holders will be able to see repayments within the established timeframe, subject to specific conditions.
To qualify for the initial distribution, creditors must complete tax documentation and register with BitGo or Kraken. For claims that have been transferred, payments will only be made to the assignee registered on the official claims list as of January 3.
Fund recovery and market impacts
Additionally, FTX will only process distributions after a 21-day no-dispute objection period. The FTX team plans to release additional updates on refunds to other creditor groups in the coming months.
FTX creditors can choose to receive their refunds via bank transfer in USD or stablecoins. FTX has amassed much of these funds through lawsuits against several other exchanges and platforms.
FTX has filed an adversary lawsuit (Nov-24) against Gate to recover $40 million to return crypto assets held on the exchange. On-chain transfers reveal at least $35 million returned to wallets controlled by FTX, wrote Sunil, the self-proclaimed champion of FTX creditors.
FTX has also taken legal action against Binance and its former CEO Changpeng Zhao to recover $1.8 billion in funds allegedly misappropriated by Sam Bankman-Fried.
Following the announcement, FTX’s native token, FTT, surged nearly 10%, marking its highest gain in nearly 10 months. A similar rally occurred in November when the reorganization plan was first approved.
However, the token remains 96% below its 2021 all-time high before the exchange collapse.
FTT Token Daily Price Chart. Source: TradingView
In October, a bankruptcy judge approved FTX’s reorganization plan, allowing the company to repay approximately 98% of creditors’ claims, including users in the “convenience class” who claimed amounts under $50,000. Those groups are expected to receive refunds early in the distribution process.
The FTX saga is nearing its end
FTX filed for bankruptcy in November 2022 following a liquidity crisis and the resignation of founder and former CEO Sam Bankman-Fried. The bankruptcy case led to multiple charges against executives at FTX and Alameda Research.
Earlier this year, Sam Bankman-Fried was sentenced to 25 years in prison. His partner in crime, Caroline Ellison, the former CEO of Alameda Research, received just 24 months in prison. This was due to Ellison’s extensive cooperation with prosecutors during Bankman-Fried’s trial.
Meanwhile, Gary Wang received no prison time for his cooperation, despite creating the code that enabled the $11 billion Alameda fraud.
Additionally, earlier this month, the U.S. government transferred $33.6 million in seized crypto from FTX to multiple wallets, potentially signaling a sale. However, as the case nears its final stages, FTX continues its efforts to recover and distribute assets. This marks a significant step toward resolution for creditors and affected users.
The article FTX begins refunds to creditors on January 3 appeared first on BeInCrypto Brasil.
