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- FTX begins creditor payments under Chapter 11 plan with a $6.5 billion reserve to address disputed claims.
- Creditors must complete tax filings and sanctions checks by January 20 to qualify for initial payouts.
- Kraken and BitGo handle FTX payouts offering fiat and crypto options but with jurisdictional restrictions.
FTX has initiated its creditor distribution process under the Chapter 11 Plan of Reorganization. The plan took effect yesterday. This marks a significant step toward resolving the fallout from its collapse in November 2022.
The initial record date for holders of allowed claims in the Convenience Classes was set for January 3. Payments to these creditors are expected within 60 days of the plan’s effective date.
Claim Eligibility and Submission Requirements
To qualify for distributions, creditors must complete several pre-distribution conditions. These include filing tax forms, selecting a Distribution Service Provider, and undergoing sanctions checks. The deadline for meeting these requirements is January 20. Submissions after this date will not be included in the initial distribution but will be processed in subsequent rounds.
FTX has introduced a Customer Portal to streamline the process. Creditors can follow an eight-step guide, with the final step involving the selection of a Distribution Service Provider. Currently, Kraken and BitGo are the two available providers, offering fiat and digital asset withdrawal options.
Both platforms support U.S. dollars and digital asset conversions, with additional regional options such as ACH and wire transfers. However, jurisdictional restrictions apply.
For example, BitGo cannot operate in New York, while Kraken is restricted in New York, Washington, and Maine. If a creditor’s jurisdiction prevents distribution, funds will be held until alternative measures are in place.
Distribution Plans and Future Adjustments
FTX has allocated $6.5 billion for disputed claims under the reorganization plan. The Plan Administrator will manage this reserve and oversee adjustments as disputes are resolved. Distributions will be funded by available cash after all reserves are accounted for. The amount creditors receive depends on the value of their assets at the time of FTX’s collapse.
FTX’s distribution timeline outpaces previous industry cases, such as Mt. Gox, where payments are still ongoing a decade later. In December, FTX debtors reported having $14.7 billion to $16.5 billion available for distribution.
Approximately 98% of creditors are expected to recover 119% of their allowed claims, signaling progress in addressing one of the largest crypto collapses to date.
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