FTX Recovery Trust announced that it will begin distributions of more than $5 billion to approved creditors on May 30, 2025, as outlined in the Chapter 11 plan. This will apply to holders of allowed claims in the Plan of Reorganization’s Convenience and Non-Convenience Classes who have completed all pre-distribution requirements.
The exchange stated: “Eligible creditors should expect to receive funds from their selected distribution service provider, either BitGo or Kraken, within 1 to 3 business days from May 30, 2025,” adding that additional distribution dates will be announced in the future.
What is the FTX plan for the second distribution?
In accordance with the waterfall priorities set forth in the Second Distribution Plan, the firm will distribute as follows:
- Allowed Class 5A Dotcom Customer Entitlement Claims will receive a 72% distribution
- Allowed Class 5B U.S. Customer Entitlement Claims will receive a 54% distribution
- Allowed Classes 6A General Unsecured Claims and 6B Digital Asset Loan Claims will each receive a 61% distribution
- Allowed Class 7 Convenience Claims will receive a 120% distribution
“The scope and magnitude of the FTX creditor base makes this an unprecedented distribution process, and today’s announcement reflects the outstanding success of the recovery and coordination efforts of our team of professionals. Our focus remains on recovering more for creditors and resolving outstanding claims.” – said the Plan Administrator of the FTX Recovery Trust John J. Ray III.
What happened to FTX?
FTX was one of the biggest cryptocurrency exchanges in the world. It allowed users to trade digital assets like Bitcoin. But in November 2022, FTX suddenly collapsed. According to reports, the company didn’t have enough money to pay back the users because it had used their funds for risky investments through a trading firm called Alameda Research.
The digital asset exchange filed for bankruptcy in the U.S., and billions of dollars in customer money went missing. In 2023, FTX’s founder, Sam Bankman-Fried, was found guilty on several fraud charges after a federal trial. Prosecutors said he had lied to investors and lenders and used customer funds to buy luxury property, donate to politics, and support Alameda Research, and the court sentenced him to 25 years in prison.
Since then, a new team has been working to recover and return money to creditors.The first official announcement that FTX would aim to repay investors came on November 11, 2022, the same day the company filed for Chapter 11 bankruptcy. In that announcement, newly appointed CEO at the time, John J. Ray III stated that the team would work to recover assets and maximize value for stakeholders, signaling the beginning of efforts to repay customers and creditors.
What Happened in FTX’s First Distribution Plan?
The first round of repayments started on February 18, 2025, focusing on customers with claims of $50,000 or less. These creditors, representing approximately 98% of FTX’s customers, received 118% of their claim amounts, including 9% interest accrued since November 2022, as outlined in the reorganization plan.
The trading venue asked the eligible creditors to complete certain steps, such as verifying their identity and submitting necessary tax forms. The payments were also processed through crypto platforms BitGo and Kraken, ensuring a secure and efficient distribution.
This initial distribution was a significant milestone in FTX’s efforts to repay its customers and rebuild trust. It set the stage for subsequent rounds of repayments to larger creditors.
However, some investors expressed frustration, as repayments were based on cryptocurrency values from November 2022, when Bitcoin was valued at around $16,000, compared to over $105,000 today. This discrepancy meant that creditors did not benefit from the recent crypto market rally.
Creditors in countries that tax digital assets faced additional financial strain, as repayments could be treated as taxable capital gains. Those in jurisdictions where cryptocurrencies are illegal encountered even greater challenges, often unable to access funds without risking legal repercussions.
What’s next?
As of now, FTX has not announced a specific date for the third round of creditor repayments. The bankrupt platform Recovery Trust has stated that additional record and payment dates will be announced in due course. This suggests that while a third distribution is anticipated, the exact timing and details have yet to be disclosed.
The cryptocurrency exchange advised creditors to stay informed through official FTX communications and ensure they have completed all necessary pre-distribution requirements, such as identity verification and tax documentation, to be eligible for future distributions.
