FTX to Begin Bankruptcy Payouts through Kraken and BitGo Starting January 3

FTX, the once-prominent cryptocurrency exchange that collapsed in 2022, has announced that it will begin distributing bankruptcy payouts to affected users starting on January 3, 2025. This follows approval from a U.S. court in October, which confirmed the distribution plan. Kraken and BitGo have been selected as the platforms through which these payouts will be made. Affected creditors will have the option to receive their repayments in stablecoins, among other payment methods. This move marks a significant step in the resolution of FTX’s bankruptcy, which has been ongoing since its sudden downfall in 2022.

The bankruptcy disbursement plan was ruled on by U.S. District Judge John Dorsey in Delaware and received broad support from FTX’s creditors. The plan provides for 98% of the creditors to be repaid at 118% of their original claims, a figure that had been decided earlier in October. However, despite the approval, the decision to repay users in cash and stablecoins rather than other assets has drawn some criticism. Sunil Kavuri, a spokesperson for FTX’s largest creditor group, voiced concerns about the cash repayment plan, but acknowledged that Kraken and BitGo were the best options for facilitating these payments due to their robust payment processing capabilities.

According to the details of the bankruptcy plan, 94% of creditors, who represent nearly $7 billion in claims against FTX, voted in favor of the plan. This shows that most creditors were satisfied with the terms of the repayment, despite some initial resistance. The approved repayment plan represents a major effort to compensate users who were affected by the sudden collapse of the crypto exchange.

John J. Ray III, the current CEO of FTX, who took over leadership from founder Sam Bankman-Fried in late 2022, praised the recovery efforts made by the company’s team. Under Ray’s leadership, FTX and its affiliated entities, such as Alameda Research, have managed to recover approximately $16 billion in assets, which will be used to compensate creditors. This recovery is seen as a major achievement, given the scale of the collapse and the challenges in dealing with the aftermath of FTX’s failure.

FTX’s bankruptcy proceedings have been closely followed, particularly after the scandal surrounding its founder, Sam Bankman-Fried. Bankman-Fried was found guilty in November 2023 on seven charges related to fraud and conspiracy, including defrauding customers and investors. He was sentenced to 25 years in prison. The collapse of FTX had significant repercussions in the cryptocurrency industry, leading to heightened scrutiny of crypto exchanges and regulatory actions worldwide. The bankruptcy case, and the subsequent recovery efforts under CEO Ray’s leadership, are seen as a key chapter in the aftermath of FTX’s implosion.

As FTX moves forward with the planned payouts starting in January 2025, the company aims to bring some closure to creditors affected by the crash. The payout process, which will be facilitated by Kraken and BitGo, is an important part of the ongoing efforts to resolve FTX’s bankruptcy and compensate those who suffered losses. While the road to full restitution may still be long, the bankruptcy process reflects a significant step toward recovering value for creditors and moving forward from the failure of one of the largest cryptocurrency exchanges in history.