FTX to Launch Second Round of Over $5 Billion Creditor Cash Distribution This Month, A Reminder for Affected Users
(Background: The U.S. Department of Justice acknowledges “FTX compensation is too low”: need improvements to current valuation methods, victims should enjoy appreciation)
(Supplementary Background: SEC’s new ### “cutting leeks”? Senator Warren exposes: Paul Atkins colluding with FTX, Sun Yuchen, and Trump Coin)
Latest Developments in FTX Bankruptcy Reorganization
FTX’s highly anticipated bankruptcy reorganization has announced that it will officially initiate its second phase of creditor distribution on May 30, 2025, with a total payout expected to exceed $5 billion.
Second Round of Creditor Distribution Initiated
FTX Trading Ltd. and its affiliated debtors (collectively referred to as FTX) have officially announced that, according to the provisions of its Chapter 11 reorganization plan, it will begin distributing cash worth over $5 billion to eligible creditors starting on May 30, 2025. The Chapter 11 reorganization plan is a procedure under U.S. bankruptcy law that allows companies to reorganize under court supervision in order to repay debts and continue operating or liquidate in an orderly manner.
Details of the Distribution Plan
According to further explanations from the FTX bankruptcy management team, eligible creditors for this distribution must be approved holders of claims defined in the plan as “Convenience Class” and “Non-Convenience Classes.” These creditors will need to complete all prerequisite steps for distribution, including necessary KYC identity verification procedures, submission of relevant tax forms, and activation of accounts with designated payment service providers BitGo or Kraken.
Further Reading:
FTX claims website has displayed “repayment amounts.” What to do if marked as Disputed?
Payments are expected to be distributed within a few business days after May 30 via BitGo or Kraken. Notably, creditors from different categories will receive varying repayment ratios; for instance, 72% for 5A level customer claims, 54% for 5B level U.S. customer claims, while level 7 Convenience Class claimants are expected to receive up to 120% of their claims. The basis for calculating these repayment amounts is the dollar value of user account balances at the time FTX filed for bankruptcy in November 2022.
Are There Additional Compensations Expected?
The bankruptcy management team has successfully recovered approximately $11.4 billion, specifically for creditor repayment; the total estimated value of recovered assets is between $14.7 billion and $16.5 billion. The bankruptcy management team previously stated that it has the capability to make customers “whole,” thanks in part to FTX’s prior investments in some forward-looking projects, such as early investments in AI research lab Anthropic and cryptocurrency Solana (SOL).
On April 17, the U.S. Department of Justice (DOJ) acknowledged that it will revisit the victim compensation mechanism in cryptocurrency fraud cases to determine if it should be adjusted to be calculated “at current value.”
Expectations for Fund Re-injection into the Market
This fund of up to $5 billion, if reinjected into the cryptocurrency market, is expected to have a significant ripple effect on the overall cryptocurrency environment. Market analysts generally believe that many creditors recovering funds may choose to reinvest in digital assets, thereby significantly enhancing market liquidity. Renowned trader ICOBeast expressed excitement about this matter on social media platform X:
“Fresh powdaaaaaa”
This comment vividly reflects the market’s eager anticipation for this “fresh ammunition.” However, the controversies arising from asset valuations at the time of bankruptcy remain unresolved, and while FTX may have further distribution plans, the specific timeline and amounts will depend on the progress of subsequent legal procedures.
