FTX will start its Chapter 11 reorganization plan on January 3, 2025, and expects to repay creditors in about 60 days. The company has partnered with BitGo and Kraken to help distribute funds, offering some hope for those impacted by its earlier collapse.
Creditors who qualify need to provide tax documents and sign up on one of the platforms to get their repayments. Payments will go to the official transferee starting from the effective date, and there will be a 21-day period for objections before the distribution process begins. More updates for different creditor groups are expected in the next few months.
Creditors can get repayments via USD wire transfers or stablecoins, with many funds coming from legal actions against other cryptocurrency platforms.
FTX recently got back $35 million from Gate.io after suing to recover $40 million in crypto assets. The company is going after Binance and its former CEO, Changpeng Zhao, for $1.8 billion in funds that are said to have been misused.
After the announcement, FTX’s token, FTT, went up by almost 10%, hitting its highest price in ten months, but it is still 96% below its peak in 2021. The bankruptcy court approved a reorganization plan in October that aims to pay back about 98% of what creditors are owed, focusing on smaller creditors with claims under $50,000.
FTX started to fail in November 2022 because it ran out of money. This led to the founder, Sam Bankman-Fried, stepping down and later being sentenced to 25 years in prison for fraud.
Caroline Ellison got a shorter sentence for helping out, and co-founder Gary Wang didn’t go to jail. The U.S. government moved $33.6 million in seized crypto from FTX, leading to questions about possible sell-offs. FTX’s reorganization is an important move for its creditors, as the company aims to recover and share assets.
