FTX, the now-defunct crypto exchange, is preparing to make amends to its creditors after two years of its shocking collapse. The once-dominant platform has announced that its bankruptcy distribution plan is set to begin as early as January 3, 2025.
A recent update revealed that Kraken and BitGo will be in charge of distributing the payouts to the creditors. This marks a major milestone in the recovery efforts, giving creditors hope of reclaiming their lost funds.
FTX’s Long Road to Recovery
When FTX filed for bankruptcy in late 2022, it left billions of dollars in customer assets in limbo. Allegations of fraud, financial mismanagement, and the collapse of sister firm Alameda Research added to the chaos.
For two years, a dedicated team led by FTX Debtors CEO John J. Ray III worked tirelessly to recover as much of the lost assets as possible. Speaking about the progress, Ray said the distribution plan kicking off in January 2025 shows how successful the recovery efforts have been
The bankruptcy plan, approved in October 2024, promises that 98% of creditors will receive at least 118% of their claim value in cash. This outcome is rare in bankruptcy cases and signals a significant win for those impacted by FTX’s collapse.
Kraken and BitGo: Trusted Names in Crypto Handling Distributions
FTX has partnered with the popular Kraken and BitGo to ensure secure and smooth payouts. Kraken, which previously supported payouts for creditors of the collapsed Mt. Gox exchange, brings years of experience and trust. The company highlighted its commitment to transparency in a recent interview.
BitGo, a leader in the crypto industry, also emphasized its reputation for safety and reliability. Its CEO, Mike Belshe, emphasized that BitGo focuses on delivering high-quality services to ensure clients feel secure while recovering their assets.
These companies will manage the initial distributions within 60 days of the January 3 effective date. Creditors can receive their funds in cash, stablecoins, or other crypto assets.
Mixed Reactions to the Distribution Plan
While many creditors have approved the recovery plan, only some are satisfied. Sunil Kavuri, representing FTX’s largest creditor group, has criticized paying out cash rather than cryptocurrencies.
He argued that distributing crypto assets directly would align better with the platform’s nature and potentially offer higher returns. Despite the criticism, the plan received overwhelming support from creditors, with 94% of the “dotcom customer entitlement claims” group voting in favor.
FTX’s collapse became one of the biggest scandals in the crypto industry. Sam Bankman-Fried, the former CEO, was once seen as a visionary but was convicted of fraud. He was sentenced to nearly 25 years in prison in 2023. Caroline Ellison, the former CEO of Alameda Research, also received a two-year sentence for her role in the collapse.
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