FTX Bankruptcy Recovery Plan Set to Repay Customers in Early 2025
In a significant milestone for one of the crypto industry’s most notorious bankruptcies, FTX is preparing to begin repaying customers in early 2025, offering hope to thousands of investors who lost funds during the exchange’s dramatic collapse in 2022.
The reorganization plan, approved by a Delaware judge in October, will take effect on January 3, 2025, with the first round of payments expected within 60 days. Crypto firms Kraken and BitGo have been enlisted to facilitate the distributions, with a third partner anticipated to be announced soon.
The initial payment round will target creditors with claims of $50,000 or less, a group that represents more than 90% of all creditors involved in the case. This strategic approach aims to provide rapid relief to the majority of affected customers.
FTX Debtors CEO John J. Ray III hailed the plan as a “significant achievement,” highlighting the success of the company’s recovery efforts. To qualify for payments, customers must complete several steps, including KYC verification, submitting tax forms, and onboarding with either Kraken or BitGo through the FTX claims portal by January 3.
The bankruptcy plan offers an unprecedented level of recovery, with 98% of creditors expected to receive at least 118% of their claim value in cash. The payments will be calculated based on the value of crypto holdings from November 2022, when FTX initially filed for bankruptcy. Nearly 94% of creditors in the “dotcom customer entitlement claims” group, representing $6.83 billion in claims, voted in favor of the plan.
The road to recovery has been long and complex. FTX’s collapse in November 2022 sent shockwaves through the cryptocurrency industry. Founder Sam Bankman-Fried was subsequently convicted on seven counts of fraud and conspiracy, receiving a nearly 25-year prison sentence. His sister firm, Alameda Research, also collapsed, with CEO Caroline Ellison sentenced to two years for her role in the scandal.
Over the past two years, FTX has been actively working to recover assets, including pursuing legal efforts to reclaim funds tied to political contributions and pre-collapse transfers. The chosen payment partners bring significant expertise to the process. Kraken previously assisted in distributing funds to Mt. Gox creditors, while BitGo has a proven track record of securing billions in crypto assets for institutional clients.
BitGo CEO Mike Belshe emphasized their commitment to providing “institutional-grade service to both retail and institutional clients.” The company has warned creditors to remain vigilant against potential phishing scams, stressing that official updates will only come through verified sources.
Customers must update their details on the FTX claims portal before January 3, with transfers or sales of claims to be processed according to official records as of that date.
This initial payment marks a crucial step in resolving one of the most significant bankruptcies in cryptocurrency history. For thousands of investors who have waited since 2022, it represents a long-awaited opportunity for financial recovery and closure.
As the cryptocurrency industry continues to mature, the FTX recovery plan serves as a testament to the importance of accountability, regulatory oversight, and robust financial practices in the digital asset ecosystem.
Get the latest crypto news today, covering Bitcoin, Ethereum, market trends, and blockchain developments. Stay informed on everything happening in the world of cryptocurrency
