Bankrupt Crypto Exchange FTX to Begin Repayment on the 3rd of January

Crypto exchanges Bitgo and Kraken will handle the disbursed funds and could take 60 days to finalize. This implied that most of the reimbursement

Bankrupt crypto exchange FTX will begin repaying users on the 3rd of January. The exchange will be working with BitGo and Kraken to disburse the funds, which could take up to 60 days to complete.

This implies that the majority of the reimbursements could be finalized by Q1 2025.

However, the first phase of the repayment will cover the ‘Convenience Class’ for those with $50K claims or below, as per the reorganization plan. A section of the FTX statement noted,

“The Initial Distribution is limited to the Plan’s Convenience Classes. Separate record and payment dates for other classes of claims will be announced in due course.”

Next steps for FTX creditors outlined

John J Ray III, the CEO of FTX Debtors, highlighted that their January timeline was a testament to the success of their recovery efforts. He added that creditors should get ready for timely repayments. In his words,

“We are well positioned to begin executing the distribution of recoveries back to all customers and creditors. We encourage customers to complete the necessary steps to begin receiving distributions in a timely manner.”

Those eligible for the refunds will be required to file tax forms and complete credential verification. Following this, users will be onboarded for compensation through either BitGo or Kraken. The compensation will be paid out in either USD or stablecoins.

The update marks the final phase of the bankruptcy process, which began two years ago following a liquidity crisis at FTX. Notably, the crisis unveiled financial misconduct by founder Sam Bankman-Fried (SBF) and top executives.

SBF was sentenced to 25 years, while the other officials received shorter sentences for cooperating with the prosecution.

That said, $16 billion is expected to be disbursed to victims. Some pundits, like Simon Dedic of Moonrock Capital, suggested that capital will be used to trade.

“What do you think will happen to alts when a bunch of degens suddenly gets billions of dollars in the middle of a bull?”

The native FTX token, FTT, jumped 10% on Sunday as the market showed renewed interest ahead of the repayments. However, the altcoin had retraced part of the weekend gains at press time.