Journalist
Posted:
- FTX will begin repayments in January, starting with $50K claims and below.
- The update has driven massive interest in the defunct exchange’s FTT token.
The bankrupt exchange FTX will 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 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, per its reorganization plan. Part of the FTX statement read,
“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
John J Ray III, the CEO of FTX Debtors, noted that their January timeline was a testament to the success of their recovery efforts. He added that creditors should get ready for timely repayments. He said,
“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 refunds must file tax forms and complete credential verification. Afterward, users will be onboarded for compensation through BitGo or Kraken. The compensation will be in USD or stablecoins.
The update could mark the final phase of the bankruptcy process, which began two years ago following a liquidity crisis at FTX. Interestingly, the crisis exposed financial wrongdoing by founder Sam Bankman-Fried (SBF) and top executives.
SBF was sentenced to 25 years, while the other officials got shorter sentences for cooperating with the prosecution.
That said, $16B is expected to be disbursed to victims. Some pundits, like Simon Dedic of Moonrock Capital, suggested that capital will be directed into the markets.
“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 following increased market interest ahead of the repayments. But the altcoin had retraced part of the weekend gains as of this writing.
