FTX selects BitGo & Kraken for payouts, enabling creditors to receive funds in stablecoins for a smoother, more secure process.
FTX creditors must complete KYC, tax forms, and onboarding with BitGo or Kraken to qualify for initial distributions by Jan 3, 2025.
Analysts predict recovered FTX funds could re-enter altcoin markets, potentially fueling the next "alt season" as creditors get payouts.
Bankrupt crypto exchange FTX has selected BitGo and Kraken as its distribution partners for processing payouts. Creditors will have the option to receive their funds in stablecoins, making the repayment process more seamless and accessible. This has raised optimism across the crypto community, with many anticipating a surge in altcoin activity as recovered funds re-enter the market.
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Streamlined Distribution Process
FTX’s claims portal confirmed that eligible creditors can convert their fiat holdings into stablecoins for repayments. The choice of stablecoins as a payout option offers users a more secure and efficient means of accessing their funds, particularly in volatile markets.
Crypto custodian BitGo and exchange Kraken will oversee the distribution process. BitGo CEO Mike Belshe highlighted the firm’s commitment to providing secure, institutional-grade services to ensure creditors reclaim their funds safely.
Kraken, in its blog post, noted its prior experience in handling bankruptcy payouts, such as its role in the Mt. Gox recovery process. FTX’s claims portal further indicates plans to onboard a third distribution partner, though details remain pending.
Effective Date and Initial Distributions
FTX’s Chapter 11 reorganization plan is set to take effect on January 3, 2025. Creditors in the "Convenience Class" will receive their payouts within 60 days of this date. This group, which represents 98% of eligible FTX creditors, will receive 119% of their allowed claims based on the value of crypto holdings as of November 2022—the date FTX filed for bankruptcy.
FTX CEO John Ray III praised the bankruptcy estate’s efforts in recovering assets, stating,
We are well positioned to begin executing the distribution of recoveries back to all customers and creditors, and encourage customers to complete the necessary steps to begin receiving distributions in a timely manner.
To be eligible for initial distributions, creditors must complete several critical steps, including Know-Your-Customer (KYC) verification, submission of tax forms, and onboarding with either BitGo or Kraken. Additionally, creditors with transferred claims must register by January 3, 2025, and clear a 21-day notice period without objections.
Altcoin Season Incoming?
The announcement is seen as impactful on the broader market. Many FTX creditors missed out on the recent Bitcoin bull run due to their funds being locked. Analysts speculate that once repayments are distributed, many creditors will reallocate their funds into altcoins, potentially fueling the next phase of alt season.
Concerns for Unsupported Jurisdictions
While the partnership with BitGo and Kraken offers a secure and streamlined solution for most users, some creditors remain concerned. Users in jurisdictions where these platforms do not operate are questioning how they will access their repayments. FTX has yet to provide clarity but has promised further updates through official communication channels.
Amid rising phishing scams, FTX has urged creditors to remain vigilant. The company emphasized that official communications will only come from verified channels and reminded users that they will never be asked to connect wallets or share sensitive information outside the official claims portal.