FTX: Repayment Plan Promises Relief for Creditors – but with Mixed Feelings

After the cryptocurrency exchange FTX collapsed more than two years ago, there is now a glimmer of hope for some of its customers: repayments are set to begin early next year. According to FTX, the restructuring plan to settle the debts will come into effect on January 3, 2025, and specific payments will commence shortly thereafter. CEO John J. Ray III optimistically stated that the company is well-positioned to execute the redistribution to all customers and creditors. The first group of customers is expected to receive repayments within 60 days after the January 3 deadline, provided certain conditions are met. The focus is on the so-called 'convenience class'—customers with claims of less than $50,000. The claims of larger creditors will be addressed later in the process. To assist with the distribution of the restored funds, FTX has enlisted the crypto companies Kraken and BitGo. The debacle surrounding FTX culminated in late 2022 with a Chapter 11 bankruptcy filing after a liquidity crisis shook the company. Former co-founder and CEO Sam Bankman-Fried was sentenced this year to 25 years in prison for fraud at the exchange. Following a lengthy bankruptcy and recovery process, FTX reportedly has $14.7 to $16.5 billion available for repayment to customers and other creditors. In October, a bankruptcy judge approved FTX's restructuring plan, which provides for returning more than their loss (approximately 119% of the original account value) to 98% of users. However, these repayment calculations are based on the U.S. dollar value of deposits from November 2022. As a result, customers had to miss out on the massive surge in Bitcoin and the general crypto market that has occurred since then.