FTX to Commence Creditor Repayments in Early 2025, Enlists Kraken and BitGo for Distribution

After over two years of legal proceedings, FTX and its affiliated entities have announced that creditor repayments will begin in January 2025.
The reorganization plan, approved by the U.S. Bankruptcy Court in Delaware, marks a crucial step in the exchange’s efforts to resolve claims following its collapse in November 2022.
FTX’s Chapter 11 restructuring plan will take effect on January 3, 2025, with initial payments expected within 60 days. The first recipients will include customers in the “convenience class,” primarily those with claims of $50,000 or less. This group represents about 98% of all eligible creditors, with payouts amounting to 118% of their claims, as outlined in court documents.
Subsequent repayment phases will be announced for other creditor groups. Eligible creditors must complete necessary tax documentation and onboarding through Kraken or BitGo to receive payments. Payments will be settled through USD wire transfers or stablecoins, depending on the customer’s preference.
John J. Ray III, CEO of FTX Debtors, said, “We have worked for two years in this case to return billions to creditors and customers. These pleadings represent a crucial step forward in the resolution of much of the harm caused by FTX’s collapse.”
Kraken and BitGo will facilitate the distributions
FTX has hired U.S.-based cryptocurrency exchange Kraken and digital asset custodian BitGo to administer the claims process. Both firms bring deep expertise in asset recovery and distribution.
Source: X
Mike Belshe, chief executive of BitGo, said he was confident the company could handle the complicated procedure. “We are proud to support FTX in ensuring a secure and efficient distribution of recovery funds,” he said. Kraken, known for its role in the Mt. Gox bankruptcy, also emphasized its expertise in handling similar cases.
The funds for repayment have been partly secured through lawsuits aimed at recovering misappropriated assets. Recent legal actions include a $40 million claim against Gate.io and a $1.8 billion case against Binance and its former CEO, Changpeng Zhao.
Additionally, the U.S. government recently moved $33.6 million in seized FTX assets to its wallets, signaling potential further recoveries.
Fallout and Legal Repercussions
FTX filed for bankruptcy in November 2022 after a liquidity crisis revealed widespread financial wrongdoing. Its founder and former chief executive, Sam Bankman-Fried, was sentenced in November 2023 to 23 years in prison. The leading executives, including Caroline Ellison and Gary Wang, have been given shorter sentences based on cooperation with the prosecution.
Despite these challenges, FTX’s management team, led by Ray, has continued to try to recover assets and rebuild trust. The company will try to complete its repayment plan as soon as possible and give closure to the affected customers and creditors.
While the repayment plan is a step forward, long-term questions about the repercussions on FTX’s reputation and the greater cryptocurrency industry remain. Observers have underlined that creditors might have missed considerable market gains since the collapse of the exchange, further underlining losses during the scandal.
As the repayments kick in, FTX has to work on a dual task: meeting its obligations and trying to regain the confidence of its stakeholders in a fast-changing market.
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