Bankrupt FTX exchange plans to repay its creditors in the Bahamas for claims less than $50,000 on February 18, 2025.
Details of FTX Repayment Process
In October 2024, the repayment process received court approval as part of a broader reorganization plan. The plan that took effect on January 3, 2025, plans to repay creditors using up to $16.5 billion in recovered assets.
The first phase of the distribution included Bahamas repayments, which account for approximately 98% of eligible creditors.
The key elements of the repayment process are:
- Convenience Class Priority of creditors with $50,000 or less claims will be the first.
- The creditors are expected to recover 118% of their claim value in USD.
- The process starts on February 18 and could extend until March 4, 2025.
Meanwhile, creditors will follow a four-step process to ensure a seamless payment process. The steps are logging into the claims portal, KYC verification, tax form submission, and selection and registration with Kraken or BitGo for distribution.
Potential Challenges and Risks
While the repayment plan promises 118% of claim values, these calculations are based on November 11, 2022 cryptocurrency prices.
This means creditors may find the actual value of their repayments lower than expected in terms of cryptocurrency holdings because of market fluctuations since then.
However, creditors who did not complete pre-distribution requirements by the ‘January 20 deadline‘ may experience delays in receiving funds.
Finally, the bankruptcy team continues to navigate complex legal issues. For example, ongoing discussions with the U.S. Department of Justice over $1 billion in seized funds.
The start of repayments signifies progress and offers hope for those affected. As the process unfolds, it will provide valuable lessons for the industry, regulators, and investors, shaping the future landscape of digital asset management and exchange operations.
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