FTX to distribute $900M to creditors in fifth payment roundThe FTX Recovery Trust and company have distributed about $10 billion since the exchange filed for bankruptcy in November 2022, leaving users cut off from their funds.
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The FTX Recovery Trust and the defunct crypto exchange announced a fifth round of creditor repayments, beginning July 31, 2024. Approximately $900 million will be distributed to eligible creditors through BitGo, Kraken, or Payoneer accounts within one to three business days. Under the recovery plan, creditors with claims under $50,000 (the “convenience class”) will receive 120% reimbursement, while larger claims will receive between 103% and 105% of their claims. This marks the continuation of an ongoing effort to repay users and creditors following FTX’s November 2022 bankruptcy.
Since the bankruptcy filing, the trust has distributed nearly $10 billion in total, including $2.2 billion in a previous payout in March 2024. These repayments come amidst the broader crypto market downturn, which led to multiple exchange bankruptcies. The underlying investigation into FTX’s collapse continues to affect key executives. Former CEO Sam Bankman-Fried and Ryan Salame, the co-CEO of FTX’s Bahamian affiliate, remain in federal prison due to their involvement in mishandling customer funds.
Legal ramifications continue to surface, as Fenwick & West, FTX’s former law advisor, agreed to a $54 million settlement of a class action lawsuit involving former users. This follows a separate $525 million suit filed by 20 users against the same firm. On the criminal front, Bankman-Fried’s 25-year sentence was upheld on appeal, with his clemency request to former President Donald Trump receiving no support. The US Senate unanimously opposed any pardon, signaling bipartisan resistance to leniency for the former crypto exec amidst broader political debates on crypto regulation and executive pardons.
These ongoing developments highlight the complexity of unwinding FTX’s collapse, with billions returned to creditors but numerous legal and regulatory questions still unresolved. The substantial reimbursements provide some relief to customers stripped of access since 2022, but the final financial and judicial impacts of FTX’s failure will likely unfold over several more years.