FTX announced that its restructuring plan officially took effect on January 3rd, with the first batch of repayments to be distributed within 60 days. This initial repayment will be allocated to “Convenience Class” creditors with claims of $50,000 or less. To receive the first repayment, creditors must complete tax form submission, choose and successfully register with a distribution service provider before January 20th.
On December 3rd, FTX announced that its approved restructuring plan from October would take effect on January 3rd, 2025, with the initial repayment distribution to creditors starting within 60 days.
The initial repayment distribution is limited to creditors in the “Convenience Class” category according to the restructuring plan. Convenience Class refers to creditors with claims of $50,000 or less, who make up over 90% of all creditors in the FTX bankruptcy case. It is expected that they will receive 118% of the claim value in USD. The distribution dates for other claim categories will be announced later.
FTX’s Debtors Plan of Reorganization, effective January 3, 2025, states that today is the initial distribution record date for holders of allowed claims in the Convenience Classes. Separate record and payment dates for other classes of claims will be announced later.
In order to receive the initial repayment distribution, creditors in the Convenience Class must fulfill the pre-distribution requirements before January 20th, 2025. These requirements include submitting tax forms (Step 7), choosing and successfully registering with a distribution service provider (Step 8), and passing sanctions screening. The complete steps are as follows:
1. Log in to the FTX claims portal (https://claims.ftx.com) for customers.
2. Complete the required KYC verification before January 3rd, 2025. (Refer to the tutorial on FTX claims application on the platform)
3. Submit the required tax forms, including the W-8 BEN form. (Refer to the tutorial on tax form submission on the platform)
4. Choose the distribution service provider, either BitGo or Kraken, in Step 8. Read the registration instructions provided by the chosen service provider and register an account with BitGo or Kraken before January 20th.
FTX stated that creditors who fail to fulfill the requirements before the deadline will not receive the initial distribution on the distribution date but may receive it in subsequent months. Additionally, according to Article 7.8 of the restructuring plan, holders who fail to fulfill the pre-distribution requirements within six months from the initial distribution record date (January 3rd, 2025) will lose their distribution rights. Furthermore, according to Article 7.14, if holders receive a request to fulfill the requirements, they must do so within the specified timeframe, or they will also lose their eligibility for distribution.
According to FTX’s bankruptcy plan, the company estimates that there will be up to $14.5 billion in cash available for distribution. This plan applies to 98% of creditors, and the repayment is calculated based on the USD value of cryptocurrencies held by FTX on November 11, 2022, the day the company filed for bankruptcy protection. Although FTX expects that the majority of creditors with claims of $50,000 or less will receive 118% of the claim value in USD, it is likely that they will still suffer significant losses unless their assets held on FTX are stablecoins.
For example, Bitcoin has surged more than 500% since FTX filed for bankruptcy protection. When FTX applied for bankruptcy protection, the price of BTC was only about $16,000. However, the current price of BTC has soared to about $98,000. This means that if a creditor held one Bitcoin on FTX at that time, they may only receive $16,000, which accounts for about 16% of the current price. It can be considered a substantial loss.
Regarding the news of FTX’s upcoming repayments, Quinten, co-founder of weRate, expressed that this is a huge positive for the cryptocurrency market. He pointed out that starting from January 3rd, FTX will begin repaying $16 billion to creditors and is expected to complete the repayments within 60 days. Quinten believes that a significant portion of this funding may flow back into the cryptocurrency market and become fuel for a bull market.
However, Sunil, a prominent creditor of FTX, responded by clarifying that repayments will not start on January 3rd. He stated that the first batch of repayments is expected to occur between February and March 2025, totaling $1.2 billion and only for creditors in the Convenience Class. The remaining $10.5 billion will be paid to creditors with claims exceeding $50,000. He further provided an overview of FTX’s total assets:
– Cash reserve: $13 billion
– Venture capital portfolio and lawsuit proceeds: Estimated between $5 billion and $7 billion.
Sunil also added that approximately 50% of the claims have been acquired by claim buyers. However, these buyers are not interested in cryptocurrency assets, which may reduce the possibility of funds flowing back into the cryptocurrency market.
FTX Claims distribution:
– Repayments do not start today, January 3rd.
– February/March 2025: $1.2 billion for Convenience Class paid within 60 days (119%).
– Claims exceeding $50,000 to be paid after.
– Total:
– FTX Cash = $13 billion
– Venture capital portfolio/lawsuits = $5 billion-$7 billion
– Claim buyers have bought 50% of claims and won’t buy cryptocurrencies.