In a latest update to the now-defunct cryptocurrency exchange FTX’s Chapter 11 bankruptcy proceedings, FTX Trading Ltd. and the FTX Recovery Trust has announced that it will commence its second distribution of over $5 billion to creditors on May 30.
The announcement marks a crucial step in returning funds to those impacted by FTX’s financial downfall in 2022, which exposed an $8 billion deficit amid a surge in customer withdrawals.
As per the official release, Under FTX’s Chapter 11 Plan, holders of allowed claims in the Convenience and Non-Convenience Classes who have completed pre-distribution requirements will receive funds. Notably, Allowed Class 7 Convenience Claims will see a 120% distribution, while Allowed Class 5A Dotcom Customer Entitlement Claims will receive 72%.Â
The announcement revealed that all eligible creditors can expect payments within 1 to 3 business days via Distribution Service Providers Bitgo or Kraken.
FTX’s collapse, triggered by risky financial ties with Alameda Research and a liquidity crisis, had a profound impact on the crypto market, drawing comparisons to major financial scandals. The upcoming distribution is anticipated to inject significant liquidity into the market, with some speculating a bullish effect on Bitcoin and altcoins. Creditors must complete KYC verification and onboard with a Distribution Service Provider to participate in this or future distributions.
This development follows court approval of FTX’s bankruptcy plan in October 2024, which prioritized customer repayments using up to $16.5 billion in recovered assets, setting a model for complex bankruptcy cases in the crypto industry.
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