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FTX has recently announced its Court-approved Chapter 11 Plan of Reorganization, which will take effect on January 3, 2025. The much-awaited redistribution of claims will start within sixty days initiation of the plan.
FTX has estimated that it owes between $14.7 and $16.5 billion to its customers and investors. However, there are reports that suggest higher figures, suggesting over $10 billion to its customers alone.
What is Chapter 11 Plan of Reorganization?
To address the financial fallout, FTX developed a comprehensive “Chapter 11 Plan of Reorganization”. The plan essentially aimed to.
• Recover FTX’s remaining assets
• Distribution of recovered assets to the creditors
• Restructuring FTX’s platform
• Address the legal and regulatory issues arising from FTX collapse.
On October 7, 2024, the U.S. Bankruptcy Court for the District of Delaware confirmed FTX's Plan of Reorganization.
John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of FTX, said: "Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history.”
Kraken & BitGo
Two prominent cryptocurrency exchanges, Kraken and BitGo, have entered into agreement with FTX. The companies will assist in distribution of assets across 200 jurisdictions around the world, to both retail and institutional customers in accordance with the Plan.
- Kraken is a California-based cryptocurrency exchange (CEX) with a network in 190 countries with features such as spot trading and regulated derivatives. In the past, Kraken has also assisted in the recovery process of Mt. Gox bankruptcy.
- BitGo is also a California-based cryptocurrency company offering wallets with hot and cold configurations and non-custodial and custodial configurations.
The FTX Debtors will provide instructions for onboarding with each of the distribution service providers (Kraken/BitGo) on the existing FTX Debtors' Customer Portal.
Pre-requisites for Claim
The distributions will only be made to the holder of an allowed claim that is processed and reflected on the official register of claims maintained by the Notice and Claims Agent. The FTX Debtors has recently announced following pre-requisites for the claim.
- Login to the FTX Debtors' Customer Portal (applicable to customers).
- Complete required Know Your Customer ("KYC") verification.
- Submit the required tax forms.
- Onboard with BitGo or Kraken.
Conclusion
If all requirements are met, 98% of creditors will receive their allowed claims by March 2, 2025. To protect yourself from scams, it is crucial to rely on official sources for information. This positive development could attract both investors and regular customers, boosting confidence in the cryptospace.
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