FTX, the once-dominant cryptocurrency exchange that filed for bankruptcy in 2022, is preparing to compensate creditors and consumers. The process, which has been delayed for more than two years owing to ongoing bankruptcy hearings and legal challenges, is now scheduled to begin in early 2025.
FTX’s bankruptcy estate announced that they would complete all procedures for reimbursement distributions by January 2025. By early December 2024, distribution agents will likely establish themselves and oversee the client payout procedure. We will instruct customers on how to create accounts on a specialized portal to facilitate their claims.
Although a Delaware bankruptcy judge approved the reorganization plan in October 2024, not all creditors are satisfied. The reimbursement calculations are based on asset valuations from the petition date, which were significantly lower than current market prices, prompting dissatisfaction among several creditors. For instance, the value of Bitcoin was around $16,000 when the bankruptcy petition was filed, significantly lower than its current value.
FTX has also been actively pursuing lawsuits to recover additional assets to assist with the payout process. Recent legal efforts include a lawsuit against the KuCoin exchange seeking to retrieve $50 million in assets, as well as allegations against Crypto.com and SkyBridge Capital. The estate is also seeking $1.8 billion from Binance and its founder, Changpeng Zhao, for alleged illegal transfers made before FTX’s bankruptcy.
With these litigation proceedings, FTX hopes to recover further funds so that it can fully recompense its consumers and creditors. However, the path to recovery remains difficult, and many are still waiting for a resolution while the exchange works through the complications of its bankruptcy processes.
