Bankrupt Exchange FTX to Begin Repayment on January 3rd

Crypto exchanges Bitgo and Kraken will handle the disbursed funds and could take 60 days to finalize. This implied that most of the reimbursement could be finalized by Q1 2025.

Bankrupt crypto exchange FTX will begin repaying creditors on 3 January, with the process expected to be completed within 60 days.

The exchange will be using crypto custodians BitGo and Kraken to handle the disbursed funds.

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

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

A portion of the FTX statement reads,

“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

FTX Debtors CEO John J Ray III noted that the January timeline is a testament to their recovery efforts. He added that creditors should prepare for timely repayments.

“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 who are eligible for the refunds will need to file tax forms and complete credential verification. Following this, users will be onboarded for compensation either through 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 highlighted financial wrongdoing 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, nearly $16B is expected to be disbursed to victims. Some commentators, like Moonrock Capital’s Simon Dedic, are speculating on the potential impact.

“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, surged by 10% on Sunday amid increased market interest ahead of the repayments. However, the altcoin had retraced a portion of the weekend gains at the time of writing.