Recently, blockchain analysts have detected several transactions involving defunct crypto exchange FTX, hinting at a potential payout to affected customers. A recent press release confirmed these suspicions, announcing that the bankrupt exchange’s “Court-approved Chapter 11 Plan of Reorganization” will become effective on January 3, 2025.
The recovery efforts, led by John J. Ray III, the CEO of the FTX Debtors, have successfully recovered billions of dollars. The announcement noted that the plan’s effectiveness and the start of distributions reflect the success of these efforts.
FTX Customers to Receive Payouts
The initial distribution, expected to occur within 60 days of the effective date, will be limited to claim holders having relatively simple claims. By prioritizing these convenience classes, FTX can efficiently process and distribute funds to these claim holders first, while more complex or disputed claims are addressed separately.
Notably, FTX has partnered with BitGo and Kraken to assist in distributing payouts to customers and creditors in supported regions. The exchange claims these partnerships will enable the efficient and secure distribution of funds. Additional distribution service providers may be onboarded in the future.
To be eligible, customers and creditors must complete the Know Your Customer (KYC) verification, submit tax forms, and onboard with the selected distribution service providers, BitGo or Kraken. Transferred claims will only be eligible for distribution if they are processed and reflected on the official claims register maintained by the Notice and Claims Agent.
The FTX Debtors will provide instructions for onboarding with the distribution service providers on the existing customer portal. The bankrupt exchange encourages customers to complete the necessary steps to begin receiving payouts promptly.
Other Pending Bankruptcy Cases
Terraform Labs, the company behind the collapsed Terra ecosystem, is proceeding with its bankruptcy plan. As part of the reorganization plans, Terraform Labs has agreed to pay up to $442.2 million to investors and other stakeholders.
Mt. Gox, the once-prominent Bitcoin exchange that went bankrupt after a massive 2014 hack, has extended its repayment deadline for creditors to October 31, 2025. This move has relieved investors anticipating market disruptions, as earlier fears of a $4 billion Bitcoin sell-off in 2024 have now been pushed to 2025.
Celsius Network, the crypto lending platform that filed for bankruptcy in July 2022, has recently announced a payout of $127 million to its creditors following its initial $2.5 billion distribution. The expected distribution will cover approximately 60% of the creditors’ claims. Despite opposition from some creditors, Celsius is working to finalize a reorganization plan.
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