FTX Payout Plan Officially Takes Effect Today, A Key Milestone for Creditors
After a long and arduous process following the dramatic collapse, FTX will begin repaying today and a total of $16B will be reallocated. This is an important milestone for creditors waiting to recover their assets. The FTX estate, which is managing the bankruptcy proceedings of the failed cryptocurrency exchange, said in December that it planned to begin repayments within 60 days of the effective date.
Focus on convenient courses
While the estate estimates total distributions will be between $14.7 billion and $16.5 billion, initial payments will be lower and concentrated in convenience categories that allow claims of $50,000 or less.
These creditors are expected to receive approximately 119% of their allowed claims, including principal and accrued interest, within 60 days. The funding totals approximately $1.2 billion, according to the plan.
Sunil Kavuri, a prominent advocate for FTX creditors, said in an X post that creditors with claims exceeding $50,000 will receive a share of a separate $10.5 billion pool. Distribution of this group will take longer.
BitGo and Kraken have been designated to manage the initial distribution to retail and institutional clients in supported jurisdictions.
Key requirements to be met
He also shared that FTX customers must complete KYC verification, submit tax forms through the FTX Debtor Customer Portal, and select BitGo or Kraken as their distribution manager. In order to be eligible to receive a distribution on the Initial Distribution Date, customers and other creditors must complete the above steps prior to the distribution record date.
Notably, analysts estimate that $2.4 billion could flow back into the cryptocurrency market once the plan is implemented. Analysts pointed out that $3.9 billion of the total claims were obtained by credit funds, which are unlikely to be reinvested in crypto assets. Additionally, 33% of the remaining claims belong to sanctioned countries, insiders, or individuals without KYC verification, who may not be able to claim funds.
