- FTX is distributing over $5B to creditors through BitGo and Kraken partnerships.
- Each class has a different recovery rate, but convenience claims are fully compensated.
- Payouts use stablecoin, giving creditors instant access and faster fund delivery.
FTX has initiated the second phase of its payout, distributing over $5 billion to creditors with approved claims. The payments will be made through distribution partners BitGo and Kraken within one to three business days from the announcement. The recovery rates vary widely among creditor classes, reflecting the priorities in the court-approved Plan of Reorganization. Convenience claimants under Class 7 receive 120% of their claims, while other customer categories receive between 54% and 72%.
Varied Recovery Rates Follow Court-Ordered Hierarchy
Permitted convenience claims, classified under Class 7, receive a distribution rate of 120%, exceeding the full claim amount. This rate contrasts with payouts to other creditor groups. Class 5A Dotcom Customer Entitlement Claims are receiving 72%, while Class 5B U.S. Customer Entitlement Claims stand at 54%. General Unsecured Claims (Class 6A) and Digital Asset Loan Claims (Class 6B) receive a 61% distribution rate. These differences align with the priority sequence outlined in the restructuring plan.
John J. Ray III, Plan Administrator of the FTX Recovery Trust, said, “Today’s announcement represents continued progress returning cash to FTX’s customers and creditors. I am proud of the outstanding success of the recoveries to date. Our work continues on recovering more for creditors and resolving outstanding claims.” This statement underlines ongoing efforts to maximize returns for creditors.
Asset Transactions Strengthen Repayment Potential
Bloomberg reports that FTX has earmarked about $11.4 billion to settle creditor claims. At the time of declaring bankruptcy on November 2022, the figure was drawn from asset valuations. Recently, the estate could repay more money, as it used proceeds from asset sales of Robinhood, Anthropic and some cryptocurrency tokens, including Solana and Sui. Creditors will recover the value of their accounts as of the bankruptcy filing, regardless of subsequent market fluctuations.
The payout mechanism primarily uses USDC and USDT stablecoins. This strategy reduces delays caused by traditional banking systems. Stablecoins enable immediate on-chain liquidity, letting creditors access funds instantly without waiting for standard clearing periods. Hence, this improves the speed and efficiency of distributions.
Related: Circle Freezes $57M USDC Linked to Libra Token Scandal
Customer Cautions and Security Measures
FTX warns customers to avoid fraudulent websites and phishing scams impersonating legitimate channels. The company instructs users to rely exclusively on authorized distribution platforms and the official FTX Customer Portal. Customers should remain vigilant since the estate will never request payment details through email. This caution aims to safeguard creditors against scams amid the complex payout process.
Sharing partnerships with Kraken and BitGo ensures payments are dealt with safely and promptly. Both sides handle big cryptocurrency transactions and meet all applicable rules and security measures. Hence, creditors may anticipate that their credit issues will be handled officially.
