FTX announced that its restructuring plan officially took effect on the 3rd of yesterday, and the first batch of repayments will be distributed within 60 days to “Convenience Class” creditors with claims of $50,000 or less. To receive the initial repayment, creditors must complete tax form submissions, select and successfully register with the distribution service provider by January 20th.
The bankrupt exchange FTX announced in December last year that its restructuring plan approved by the court in October last year will officially take effect on January 3, 2025, and the initial repayment distribution for the first batch of creditors will take place within 60 days after that date.
The initial repayment distribution is limited to creditors classified under the “Convenience Class” in the restructuring plan. The Convenience Class refers to creditors with claims of $50,000 or less, constituting over 90% of all creditors in the FTX bankruptcy case, expected to recover 118% of the claim value in USD. Distribution dates for other claim categories will be announced later.
Today, the official announcement was made that the restructuring plan has taken effect, emphasizing that to receive the initial repayment distribution, creditors in the “Convenience Class” must fulfill pre-allocation requirements by January 20, 2025, including submitting tax forms (step 7), selecting and successfully registering with the 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 clients).
2. Complete the required KYC verification by January 3, 2025. (Refer to the FTX Claims Application Tutorial on Dapp.com)
3. Submit the required tax forms, including the W-8 BEN form. (Refer to the Tax Form Submission Tutorial on Dapp.com)
4. After choosing the distribution service provider BitGo or Kraken in STEP8, read the registration instructions provided by the selected service provider, and register an account with BitGo or Kraken before January 20.
Failure to meet the requirements by the deadline will result in creditors not receiving the allocation on the initial distribution date but may receive it in subsequent months. Additionally, as stipulated in sections 7.8 and 7.14 of the restructuring plan, creditors who do not complete the pre-allocation requirements within six months from the initial distribution record date (January 3, 2025) will forfeit their allocation rights, and failure to complete requested tasks within the specified deadline will also result in loss of distribution eligibility.
Creditors’ Compensation:
According to FTX’s bankruptcy plan, the company estimates cash reserves of up to $14.5 billion for distribution, applicable to 98% of creditors, with repayments calculated based on the USD value of cryptocurrencies held by FTX on November 11, 2022. While most creditors (claiming $50,000 or less) are expected to recover 118% of the claim value in USD, unless assets held on FTX are stablecoins, actual returns may still result in significant losses.
Bitcoin Soars Over 500% Since FTX Bankruptcy:
For example, when FTX applied for bankruptcy protection, the price of BTC was around $16,000. However, the current price has surged to approximately $98,000. This means that if a creditor had one BTC held at FTX, they may only receive $16,000, representing about 16% of the current value, resulting in substantial losses.
FTX Repayments Injecting $16 Billion into Crypto Market?
Regarding the upcoming repayments by FTX, Quinten, co-founder of weRate, stated that this is a significant boon for the crypto market. He pointed out that FTX will begin repaying creditors starting from January 3, with an estimated total repayment of $16 billion to be completed within 60 days. Quinten believes that a substantial portion of these funds may flow back into the cryptocurrency market, acting as fuel to drive a bullish market.
However, prominent FTX creditor Sunil clarified that repayments will not commence on January 3. He noted that the first batch of repayments is expected between February and March 2025, totaling $1.2 billion for “Convenience Class” creditors and $10.5 billion for creditors with claims exceeding $50,000. He further outlined FTX’s total asset overview:
– Cash reserves: $13 billion
– Venture capital portfolio and lawsuit proceeds: Estimated between $5 billion to $7 billion
Sunil added that approximately 50% of claims have been acquired by claim buyers, who are not interested in crypto assets, potentially reducing the likelihood of funds flowing back into the crypto market.