- FTX sets $16 billion for creditor claims; plans to repay 98% of users 119% of their claims.
- FTX’s fund distribution kicks off, targeting a 60-day payout timeline for initial creditors.
- Despite 2022’s collapse, FTX’s reorganization aims to resolve disputes with a $6.5 billion reserve.
FTX, the bankrupt crypto exchange, has started paying out amounts to creditors under its Chapter 11 Plan of Reorganization. The plan will commence on January 3rd, 2025, addressing the financial impacts of FTX’s bankruptcy in November 2022.
Under the reorganization plan, creditors will likely receive about $16 billion, with initial distributions to the eligible claimants to be made within 60 days. This development is considerably faster than any other cryptocurrency-related bankruptcy, including Mt. Gox, which has been distributing its losses for over a decade.
Convenience Classes to Receive Priority Payments
The reorganization plan refers to the legal claims that will be grouped into what is referred to as the “Convenience Classes,” where all claimants with allowed claims not exceeding $50,000 are included. This group will be the first to receive payments, contingent on fulfilling pre-distribution requirements. However, some of these are providing Know Your Customer (KYC) documentation, providing tax documentation, and choosing the Distribution Service Provider by January 20, 2025.
FTX has established a Customer Portal to guide creditors through the claims process, which involves eight steps. The final step requires creditors to choose between Kraken and BitGo as their service providers. These providers facilitate withdrawals in fiat or digital assets, with options tailored to specific regions. However, restricted jurisdictions like New York, Washington, and Maine will face distribution delays until the implementation of alternative measures.
Asset Valuations Based on 2022 Prices
Under the plan, the value of creditor claims will be assessed in the context of the price of cryptocurrencies when FTX crashed in November. Moreover, Bitcoin, trading between $15,000 and $17,000 early last year, was trading at press time nearly $100,000.
This approach has drawn criticism from some creditors, who argue it undervalues their holdings. Despite this, the plan outlines an eventual recovery rate of 119% for 98% of creditors. Additionally, the Plan Administrator will oversee distributions, manage claims reserves, and ensure compliance with the approved reorganization plan.
Increased Vigilance Against Fraud and Phishing
FTX debtors have warned creditors about potential phishing attempts posing as official communications. They emphasize the importance of using the official Customer Portal to file claims and access distribution services securely.
Moreover, FTX aims to resolve disputes and finalize additional payments as the reorganization process unfolds. The Chapter 11 plan signifies one of the final phases in addressing the fallout from the exchange’s bankruptcy, with executives facing legal consequences for their roles in the collapse.
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