FTX Debtors' Restructuring Plan Takes Effect, Creditors Can File Claims to Receive Refunds

After nearly two years of back-and-forth, and countless moments of rekindled hope followed by shattered dreams, investors' money finally has a chance to be returned.

Bankrupt crypto exchange FTX has begun accepting creditor claims for the first round of cash distributions, as part of a court-approved restructuring plan.

Authorized creditors can now submit claims through FTX's official website to receive refunds, with the initial round of distributions set to begin within 60 days after the effective date of January 3, according to the exchange's announcement.

The initial compensation phase will involve about $1.2 billion, and after a lengthy bankruptcy and recovery process, FTX now has between $14.7 billion and $16.5 billion available to repay customers and other creditors.

Upon hearing this news, creditors were understandably elated. Although cash compensation entails potential losses, the long road to debt recovery has finally reached its end, and most users are still overjoyed. However, for the market, the mixed feelings seem more apparent; FTX's compensation means liquidity may flood in, but its sell-off fundraising has also cast a shadow over some cryptocurrencies.

It must be acknowledged that the black swan event from two years ago continues to have a profound impact on the crypto market even today.

The FTX incident is undoubtedly a significant negative mark in the not-so-distant history of cryptocurrency. At that time, FTX's collapse swept through the entire crypto sector, causing a chain reaction that affected hundreds of crypto companies and resulted in losses for numerous investment institutions. This not only led to a severe market downturn but also completely obliterated the mainstream recognition of cryptocurrencies that had just begun to improve. On the other hand, the various outrageous operations by SBF and his team, including fund misuse, financial fraud, and lottery-style decision-making, sparked extreme anger among users who felt manipulated and toyed with.

Returning to the debt issue, on November 12, 2022, SBF announced on social media that over 130 affiliated companies, including the exchange FTX.com and the related trading company Alameda Research, had voluntarily filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code to "orderly assess and liquidate assets from the perspective of global stakeholders." Initially, The Wall Street Journal reported that FTX had a funding gap of about $8 billion. However, as the hearings progressed, the total debt amount grew astonishingly, ultimately resulting in over 36,000 claims and a total debt of approximately $16 billion.

Since then, creditors and FTX have engaged in a long tug-of-war, with the restructuring "wolf" constantly appearing, and FTT becoming a core subject of this narrative.

As early as January 2023, FTX's newly appointed CEO John J. Ray III indicated plans to restart the exchange, but unsurprisingly, no one cared at a time of trust collapse. It wasn't until three months later, in April 2023, that Andy Dietderich, a lawyer from FTX's law firm Sullivan Cromwell, stated that FTX was considering reopening its exchange business at some point in the future. Since some debts had already been recovered by then, the market began to shift its perspective from a frantic debt collection view to a restructuring plan. Subsequently, more good news emerged regarding the restructuring; in May, John J. Ray III confirmed the FTX 2.0 plan, and in June, court documents even revealed that several companies, including Nasdaq, Ripple, and BlackRock, had acquisition plans for it.

Affected by the news, although the market had once again fallen silent, confidence in the restructuring plan gradually strengthened. By November 2023, after SEC Chairman Gary Gensler mentioned that "restarting FTX within the legal framework is possible," the market officially began to participate in the restructuring narrative pricing. The directly affected FTT was snatched up in the over-the-counter market, surging 40% to a peak of $5.54. However, with the disclosure of court documents, the court's confirmation of the utility token's attributes declared FTT's intrinsic value to be zero, shattering the dreams of its holders once again.

Although the dreams of FTT holders were shattered, creditors' compensation was a certainty. With the continuous rise of the crypto market, in February 2024, FTX stated that it had sufficient funds to fully pay all approved customer and creditor claims. By October 8, a U.S. court judge officially approved FTX's restructuring plan, allowing FTX to make its first repayments to creditors, involving amounts exceeding $14 billion.

The timeline for the compensation plan was pushed back repeatedly, but finally, on January 3 of this year, the FTX debtors' restructuring plan officially took effect. The first batch of debts will begin compensation within 60 days after January 3. According to FTX's plan, creditors need to complete tax form submissions and KYC verification by January 20, with the first batch of "convenience class" users receiving repayments first. This includes users with claims of $