Important points
More than two years after the collapse of cryptocurrency exchange FTX, some customers will begin receiving refunds early next year.
FTX's restructuring plan to repay its debtors will take effect on January 3, 2025, with actual payments to be made shortly thereafter, the company announced on Monday.
“We are well-positioned to begin distributing recoveries to all customers and creditors,” said FTX CEO John J. Ray III.
FTX repayment schedule
The first customers will begin receiving payments within 60 days of the January 3 effective date, provided they meet certain conditions.
The first repayment will be given priority to “convenience class” customers, primarily those with invoices of $50,000 or less. Subsequent repayment groups, which are likely to include larger debtors, will be announced at a later date as the process progresses.
To help distribute recovery funds, FTX has enlisted crypto companies Kraken and BitGo.
FTX customers will finally be paid back, but will that be enough?
FTX filed for Chapter 11 bankruptcy protection at the end of 2022 due to the liquidity crisis. Earlier this year, former co-founder and former CEO Sam Bankman Fried was sentenced to 25 years in prison for his role in the exchange's fraud scandal.
After a lengthy bankruptcy and reorganization process, FTX now has between $14.7 billion and $16.5 billion to repay customers and other debtors. In October, a bankruptcy judge approved FTX's reorganization plan, which includes a schedule for repaying 98% of users in excess of the claimed loss in account value (approximately 119%). .
However, these repayment calculations are based on the US dollar equivalent of customer deposits as of November 2022. In other words, customers are missing out on the massive rally in Bitcoin and the larger crypto market that has been going on since then.
For example, Bitcoin (BTCUSD) was trading around $17,000 on November 11, 2022. Currently, its value is over $105,000.
