Defunct cryptocurrency exchange FTX plans to kickstart the “initial distribution” of funds to customers affected by its bankruptcy in 2022. This FTX news kicked some market euphoria.
Based on the plan, the distribution will be carried out through Kraken and BitGo. Precisely, the repayment process will become effective from January 3, 2025.
FTX News: Latest Update on Creditors’ Repayment
The initial distribution will eventually follow 60 days after the effective date, per the plan.
FTX Debtors CEO John J. Ray lll acknowledged that the team behind the process had worked meticulously on the plan for the past two years.
These broad-based efforts include the recovery of billions of dollars from several sources.
In September, the firm unstaked more than $1 billion of Solana in collaboration with its sister trading firm, Alameda Research.
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Though the action raised fears over the readiness of the market to absorb such a sell-off, it was part of FTX’s effort to reimburse its creditors.
A month ago, a former top Alameda Research co-CEO, Sam Trabucco, was forced to forfeit some of his assets. This includes his 53-foot yacht, which cost $2.51 million, and two San Francisco apartments worth $8.7 million.
All of Trabucco’s FTX settlement amounted to more than $70 million. As the crypto exchange nears the distribution of the assets, Ray lll described it as “reflections of the outstanding success of the recovery efforts.”
Partner Exchanges Approved by Court
A representative of the largest FTX creditor group, Sunil Kavuri, has reasons to think that FTX plans to add another distribution partner apart from Kraken and BitGo.
However, these two are the only partner exchanges approved by the court to participate in the distribution process for now. Also, Kavuri noted that funds can be distributed to creditors through stablecoins.
Kraken has broken the silence on the latest development.
Speaking of its prowess and capability, the US cryptocurrency exchange stated,
“To prove we back client account holdings with in-kind, fully reserved assets, we pioneered the Proof of Reserves process in 2014 and have committed to undertaking it regularly since January 2022.”
Kraken even highlighted its part in Mt.Gox’s asset distribution to creditors.
Similarly, BitGo highlighted its “long-standing reputation as the most secure choice in the industry.”
With its self-certified capability, it boasts of offering peace of mind to users by helping them grow their assets.
On the part of FTX, the CEO says all is ready to commence the payout, but creditors are advised to fulfill the listed requirements to ensure that they receive their claims promptly.
FTX plans to execute payment of the claim based on dollar value rather than cryptocurrencies. It is worth noting that this is the dollar’s value as of when the exchange filed for bankruptcy in 2022.
Kavuri has criticized this plan, stating that the payment should be in cryptocurrencies.
Several creditors have also spoken against the reimbursement plan, citing that the intended payout is inequitable. This becomes a big concern considering that most digital assets have risen significantly from that time till now.
A clear example is Bitcoin (BTC), which traded at around $16,000 at the time of the bankruptcy. CoinMarketCap data shows that the flagship cryptocurrency trades at $106,383.59, 3.12% higher than its value in 24 hours.
