FTX will begin customer refunds from January
After more than two years, FTX's long-awaited reorganization plan already has a specific date for repayment to the exchange's creditors to begin. According to a statement revealed by the exchange, the official reorganization plan will begin in January 2025.
FTX said it is completing the final prerequisites that will make the payment viable. Therefore, the official schedule with exact dates should be released in the coming weeks.
On November 11, 2022, FTX declared bankruptcy after the discovery of a series of frauds involving the company's activities. Days earlier, the exchange blocked withdrawals, preventing several customers from being able to withdraw money and their cryptocurrencies.
FTX Plan Details
According to FTX, this reorganization plan will pave the way for the company to begin payment distributions to creditors and customers. Before January 2025, the exchange said it will finalize agreements with specially designated distribution agents.
To be eligible for payments, customers will need to create an account with distribution agents. This account must go through all identity and balance validation steps due by FTX.
The platform's bankruptcy team said it will announce specific dates for the start of distribution in January. This announcement is subject to a court order approving the schedule.
The announcement detailed that the first distribution will take place approximately 60 days after the court order is approved. Therefore, some payments may begin to be made at the end of the first quarter of 2025.
In addition to creating an account with distribution agents, lenders will also need to “complete identity verification (KYC) and submit required tax forms prior to the distribution registration date.”
This latest update comes after the court approved its bankruptcy plan in October. Under this reorganization plan, FTX will distribute more than $6.6 billion to clients.
Although the approved plan will reimburse users more than 100% of their blocked funds, payment will be made in dollars. Whoever kept cryptocurrencies will receive the balance equivalent to the value of the assets.
The rise and fall of FTX
At its peak, FTX was the exchange that grew the most in volume in the world. Weeks before the declaration of bankruptcy, the platform created by Sam Bankman-Fried, SBF, was the second largest in the world in trading volume, behind only Binance.
However, SBF created a fraud scheme to embezzle approximately $8 billion in client funds. These funds went to FTX's sister company, Alameda Research, which used the money to make a series of donations and investments.
The practice caused FTX's balance sheet to develop a huge deficit which, when discovered, forced the exchange to file for bankruptcy. There was also a hacker attack that stole billions from the platform, leaving FTX decapitalized.
For the role played in its collapse, SBF received a 25-year prison sentence. Other executives such as Ryan Salame and Caroline Ellison also received prison sentences of seven and two years, respectively.
Meanwhile, Gary Wang escaped from prison, despite having developed the software that helped SBF commit the embezzlements.