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The bankruptcy of FTX was a seismic event in the history of the cryptosphere. It deeply shook investors’ confidence and revealed major structural flaws within the industry. Nearly two years after its collapse in November 2022, the bankrupt exchange is back in the spotlight with an ambitious reorganization plan, recently validated by the American justice system. This plan includes an unprecedented repayment to creditors, starting on January 3, 2025, with a promise of restitution of up to 118 % of declared debts. To orchestrate this operation, FTX relies on recognized players in the sector. Kraken, accustomed to this type of procedure after playing a key role in managing the Mt. Gox case, and BitGo, an expert in secure crypto custody, have been chosen to manage the repayments. Their involvement offers both security and transparency, two essential values to regain the trust of creditors and ease the ongoing tensions.
A structured repayment for creditors : a strong signal
FTX has unveiled a structured repayment plan aimed at regaining the eroded trust of investors since its bankruptcy in November 2022. Validated by the Delaware bankruptcy court last October, this project is part of the American Chapter 11 framework and anticipates the start of repayments on January 3, 2025. According to the plan details, creditors will be able to recover up to 118 % of their declared debts, a prospect that contrasts with the usual bankruptcy scenarios in the crypto industry.
John J. Ray III, the CEO currently leading FTX’s restructuring, has specified the extent of the work accomplished: “our efforts over the past two years have allowed us to recover billions of dollars intended for creditors and clients.” Behind this statement lies the scale of efforts made to identify and secure lost funds, while sanitizing a financial system previously marked by major failures and opaque management.
A key element of this plan relies on the involvement of Kraken and BitGo, two companies recognized for their expertise in managing cryptos. Kraken, a historical player in the sector, has already demonstrated its capabilities during the Mt. Gox case. Indeed, the company contributed to the secure restitution of creditors’ funds. The American exchange has declared: “we are pleased to participate in this process thanks to our expertise in asset recovery and distribution.”
As for BitGo, a specialist in secure crypto custody, the firm emphasizes strict security protocols to ensure the integrity of operations. Mike Belshe, its CEO, insists on this commitment: “we have protected billions of assets for institutions, and we will continue to act with the highest level of responsibility and integrity.” This strategic alliance aims to reassure creditors about the reliability of the repayment process and ensure complete transparency at every step.
By choosing solid partners, FTX intends to fulfill its obligations to creditors while also demonstrating its willingness to turn the page on a scandal that profoundly shook the cryptosphere. This structured repayment plan thus constitutes a first concrete response for the thousands of victims, while laying the groundwork for an ambitious reorganization.
Strict conditions and a regulated framework for repayments
To ensure a structured and transparent repayment, FTX has established a series of rigorous procedures for eligible creditors. They will need to log into the dedicated platform, the FTX Customer Portal, to validate their identity through the KYC (Know Your Customer) process. In addition to this identity verification, they will need to submit the required tax forms and choose between a cash or crypto repayment, depending on available options and current regulations. This process leaves no room for ambiguity: payments will be strictly reserved for registered holders of claims as of January 3, 2025. By imposing these conditions, FTX aims to prevent any legal risks and ensure impeccable traceability of redistributed funds.
This strict framework comes in a context where investors’ memories are still marked by the excesses and mismanagement of the past. Accusations of fund abuse and poor governance continue to haunt FTX’s reputation. For example, Sam Bankman-Fried, its former CEO, was sentenced last November to 23 years in prison for fraud. This sentence highlighted the scale of the scandal and underscores the shortcomings of a financial system that has so far been fragile and poorly regulated.
However, under the leadership of John J. Ray III, FTX is undertaking a colossal task to turn the page on this fiasco. Since taking office, Ray and his team have managed to recover and secure billions of dollars for the benefit of creditors. This reorganization plan goes far beyond a simple restitution of funds. It could serve as an unprecedented model for managing bankruptcies in the crypto industry, often criticized for its opacity and lack of regulation.
With this offer of repayments of up to 118 % of declared debts, FTX lays the foundations for a new norm for bankruptcy procedures. If this project comes to fruition, it will demonstrate that it is possible to restore trust in a market seeking stability. Conversely, any shortcoming or delay could amplify investors’ mistrust and compromise the efforts made thus far. In a rapidly changing sector, the outcome of this plan will be crucial for the future of the cryptosphere and its relations with regulators.
The announcement of a repayment potentially reaching 118 % of the debts raises major questions for the future of the cryptosphere. If this initiative succeeds, it could strengthen the credibility of bankruptcy procedures and establish a new legal benchmark for distressed companies. Conversely, any delay or failure could rekindle investors’ mistrust, already shaken by past scandals. Therefore, this reorganization plan exceeds the simple framework of FTX: it could set a financial precedent for the industry, highlighting the need for stricter regulation and transparent management.
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Diplômé de Sciences Po Toulouse et titulaire d’une certification consultant blockchain délivrée par Alyra, j’ai rejoint l’aventure Cointribune en 2019.
Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l’économie, j’ai pris l’engagement de sensibiliser et d’informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu’elle offre. Je m’efforce chaque jour de fournir une analyse objective de l’actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
