Key Takeaways
- Agreements with specialized distribution agents are expected to be finalized in early December
- The initial creditor payouts are expected in March 2025.
FTX, the bankrupt crypto exchange, announced on Thursday that it plans to begin repaying creditors in March 2025. The company has collected $16.5 billion over the past two years and expects to finalize agreements with distribution agents by early December.
John Ray, the executive leading FTX through its bankruptcy proceedings, stated that the company is working diligently to meet its repayment goals. “While we continue to take actions to maximize recoveries, we are full steam ahead to reach arrangements with our distribution agents and return proceeds to creditors and customers as quickly as possible,” Ray said in a statement.
FTX’s collapse in November 2022 followed a wave of customer withdrawals prompted by concerns over the company’s financial stability. Investigations revealed that former CEO Sam Bankman-Fried had used customer deposits to offset losses at Alameda Research, a related trading firm. Bankman-Fried was sentenced to 25 years in prison earlier this year, a decision he is currently appealing.
Under the proposed repayment plan, most customers are expected to receive 119% of the cash value of their deposits at the time of the collapse. This valuation reflects crypto prices in late 2022, a point of contention for some creditors. Bitcoin and Ethereum, for example, were valued at $20,000 and $1,200, respectively, during the collapse but have since risen to $97,000 and $3,300.
Attorney Steven Coverick, representing Alvarez & Marsal, explained at a recent hearing that FTX cannot issue repayments in crypto, as the exchange no longer holds those assets. Purchasing the required amounts on the open market would likely drive up prices significantly and create logistical challenges, he noted.
FTX outlined a detailed timeline for the repayment process. Agreements with specialized distribution agents are expected to be finalized in early December, after which customers will receive instructions to establish accounts with these agents through the company’s customer portal.
The exact repayment date will be announced by the end of December, pending court approval of the disputed claims reserve amount. Initial distributions are set to begin within 60 days of the plan’s effective date, anticipated in January 2025.
Ray emphasized that the timeline reflects ongoing recovery efforts, which have secured substantial funds for creditors. He reassured stakeholders of the team’s commitment to maximizing recoveries and expediting the return of funds.
