FTX Bankruptcy Distributions

Customers impacted by the collapse of crypto exchange FTX will receive bankruptcy distributions via Kraken and BitGo, effective January 3, 2025.

The "initial distribution" is expected to occur within 60 days of the effective date, as announced by FTX on Monday.

> "For the past two years, our team of professionals have meticulously and efficiently worked to recover billions of dollars to reach this point," stated FTX Debtors CEO John J. Ray III. "The Plan becoming effective in January 2025 and the start of distributions are reflections of the outstanding success of the recovery efforts."

A representative from the largest creditor group, Sunil Kavuri, noted that FTX's distribution partners are Kraken and BitGo, with a third partner expected soon. Funds may also be distributed via stablecoins, according to Kavuri.

Kraken indicated its previous collaboration distributing funds for Mt. Gox creditors. Founded in 2010, Mt. Gox was the largest bitcoin exchange before a security breach in 2014 resulted in the loss of 850,000 bitcoins.

> "To prove we back client account holdings with in-kind, fully reserved assets, we pioneered the Proof of Reserves process in 2014 and have committed to undertaking it regularly since January 2022," stated Kraken. "We supported the investigation following Mt. Gox’s collapse and were selected to support the distribution of funds to its creditors in 2024."

BitGo emphasized its commitment to protecting crypto assets for institutions and stated that it prioritizes safety and transparency.

> "BitGo is proud to support FTX," said CEO Mike Belshe. "With our long-standing reputation as the most secure choice in the industry, we work to offer institutional-grade service to both retail and institutional clients."

Judge John Dorsey from the U.S. Bankruptcy Court for the District of Delaware approved FTX's bankruptcy plan in October, which was filed two years prior. The plan assures that 98% of creditors will receive at least 118% of their claim value in cash.

Approximately 94% of creditors in the "dotcom customer entitlement claims" class, representing around $6.83 billion in claims, voted in favor of the reorganization plan.

Kavuri criticized the plan, arguing that the estate should distribute cryptocurrencies in kind instead of using the dollar value at the time of bankruptcy filings in 2022.

FTX filed for bankruptcy in late 2022. CEO Sam Bankman-Fried was found guilty in November 2023 of seven criminal counts, including wire fraud, and sentenced to nearly 25 years in prison. Sister trading firm Alameda also collapsed, and CEO Caroline Ellison received a two-year sentence for her role in FTX’s downfall.