FTX and its affiliated debtors have confirmed that their Chapter 11 reorganization plan, approved by the court, will go into effect on January 3, 2025. The first round of creditor distributions is expected to occur within 60 days of the plan’s effective date.
The company disclosed agreements with BitGo and Kraken to facilitate the distribution process.
FTX Creditors To Finally Recieve the Funds in 2025
According to the official notice, FTX outlined a timeline for the initial repayment of creditors more than two years after filing for Chapter 11 bankruptcy. The first group of eligible claim holders could see repayments within the set timeframe, subject to specific conditions.
To qualify for the initial distribution, creditors must complete tax documentation and onboard with either BitGo or Kraken. For claims that have been transferred, payments will only be made to the registered transferee listed on the official claims register as of January 3.
Additionally, a 21-day objection period must pass without dispute before these distributions are processed. Further updates on repayments for other creditor groups are expected in the coming months.
FTX creditors can choose to get reimbursed through a USD wire transfer or even stablecoin. A large part of these funds have been accumulated through lawsuits against several other exchanges and platforms.
“FTX filed an adversary lawsuit (Nov-24) against Gate to recover $40m to return crypto assets held on the exchange. On-chain transfers reveal at least $35m returned to FTX-controlled wallets,” wrote Sunil, the self-proclaimed FTX creditor champion.
FTX has also taken legal action against Binance and its former CEO, Changpeng Zhao, to recover $1.8 billion in allegedly misappropriated funds by Sam Bankman-Fried.
Following the announcement, FTX’s native token, FTT, surged nearly 10%, marking its highest valuation in almost 10 months. A similar rally occurred in November when the reorganization plan was first approved.
However, the token remains down by 96% from its 2021 all-time high before the exchange’s collapse.
In October, the bankruptcy judge approved FTX’s reorganization plan, allowing the company to repay approximately 98% of creditors’ claims, including users in the “convenience class” who claimed amounts below $50,000. These groups are expected to receive repayments early in the distribution process.
The FTX Saga is Nearing its End
FTX filed for bankruptcy in November 2022, following a liquidity crisis and the resignation of founder and former CEO Sam Bankman-Fried. The bankruptcy case led to several indictments of FTX and Alameda Research executives.
Earlier this year, Sam Bankman-Fried was Sentenced to 25 Years in Prison. His partner in crime, Caroline Ellison, the former CEO of Alameda Research, got away with only 24 months in prison. This is due to Ellison’s extensive cooperation with the prosecutors during Bankman-Fried’s trial.
Meanwhile, Gary Wang received no jail time for his cooperation, despite creating the code that enabled Alameda’s $11 billion fraud.
Earlier this month, the US government moved $33.6 million in FTX-seized cryptocurrency to various wallets, potentially signaling a sell-off. As the case approaches its final stages, FTX continues its efforts to recover and distribute assets. This marks a significant step toward resolution for affected creditors and users.
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