After a two-year bankruptcy restructuring process, the liquidation team of the FTX exchange, which filed for bankruptcy in November 2022, announced today (17th) that FTX's bankruptcy plan approved by the court in October this year will officially take effect on January 3, 2025, and the first distribution of repayments to creditors will be made within 60 days after that date.
FTX announced that the initial repayment distribution will be limited to creditors in the "convenience class" of the bankruptcy plan. The convenience class refers to creditors with claims of $50,000 or less, and these investors account for more than 90% of all FTX bankruptcy case creditors. The distribution dates for other classes of claims will be announced at a later appropriate time.
FTX Collaborates with BitGO and Kraken to Process Customer Repayments
It is worth noting that FTX has also announced that it has reached agreements with two companies, BitGo and Kraken, to serve as third-party distribution service providers to assist FTX in distributing repayments to customers and other creditors in accordance with the bankruptcy plan.
BitGo is a globally regulated cryptocurrency custodian, while Kraken is a well-known cryptocurrency exchange in the US, providing spot and derivative services in up to 190 countries/regions.
The two companies have already appeared on STEP 8 of the FTX claims website, and the website also indicates that a third repayment distribution service provider will be announced (not yet disclosed as of the editorial deadline).
Payment Methods Include Fiat and Stablecoins
Currently, the FTX claims website has added STEP 8, where creditors need to select a distribution service provider (Distributions Services Provider).
The website also shows that the repayment distribution payment methods of BitGo and Kraken include stablecoins and fiat currencies, and the two payment methods will incur different fees at the two companies, but both have lower fees for stablecoins than for fiat US dollars.
FTX Claim Submission Requires Necessary Steps
Finally, FTX also reminds that to be eligible for the initial distribution on the distribution date, customers and other creditors must complete the following actions before January 3:
- Log in to the FTX Claims Portal website ( https://claims.ftx.com ) (for customers).
- Complete the required KYC verification. (See ABMedia's FTX Claim Submission Tutorial)
- Submit the required tax forms. (See ABMedia'sTax Form Submission Tutorial)
- After selecting the distribution service provider BitGo or Kraken in STEP8, read the registration instructions of the selected service provider and establish an approved account with BitGo or Kraken before January 3.
Further Reading: FTX Predicts Repayment Will Start in Q1 Next Year! How to Confirm KYC Completion and Fill Out Tax Forms - Full Tutorial
How Much Compensation Can Creditors Receive?
According to the FTX bankruptcy plan, the company estimates that it will have up to $14.5 billion to $16.3 billion in cash available for distribution. The plan applies to 98% of creditors, and the repayments will be "based on the US dollar price of cryptocurrencies held by FTX on the Chapter 11 filing date of November 11, 2022".
Although FTX estimates that the vast majority of creditors (claims of $50,000 or less) will be able to recover 118% of the claim value in US dollars. However, unless the user's assets held at FTX were stablecoins, they will most likely still suffer significant losses.
Bitcoin Has Surged Over 564% Since FTX Bankruptcy
For example, when FTX filed for bankruptcy protection, the BTC price was only around $16,000, but the current BTC price has soared to $106,272, which means that if a creditor held one Bitcoin on FTX at the time, they would only be able to recover $16,000 in the end, only about 15% of the current price, which can be said to be a huge loss.
