FTX is set to begin distributing funds to small creditors on Feb. 18, marking a key development in the defunct crypto exchange’s bankruptcy process.
The Joint Official Liquidators (JOLs) of FTX Digital Markets Ltd. confirmed Tuesday that creditors with approved Convenience Class claims — valued at $50,000 or less — will receive full repayment along with post-petition interest of 9% per annum.
The funds will be credited to verified BitGo accounts linked to the claimants’ registered email addresses, and a formal record of the payout calculations will be uploaded to the FTX Digital Claim Portal in the weeks following the distribution.
The portal will ask eligible claimants to verify their BitGo accounts before they can receive their money. Distribution will start at 10 am Eastern Time, on February 18.
Wait for large creditors
The Convenience Class payout marks a significant milestone in FTX’s bankruptcy proceedings, but it does not resolve the larger claims that are still pending.
While smaller creditors will receive 100% of their adjudicated claims, larger investors — including institutional firms and venture capital backers — are awaiting a resolution that remains subject to legal disputes and asset recovery efforts.
The broader bankruptcy proceedings, led by FTX’s new management team under CEO John J. Ray III, have focused on asset recovery efforts, including legal action against former executives and third parties that allegedly benefited from the exchange’s mismanagement.
FTX will distribute the funds as it finalizes its liquidation and returns money to creditors. The larger claims are still subject to complex financial and legal considerations. Negotiations continue over the distribution of assets.
FTX bankruptcy
FTX, once one of the biggest crypto exchanges on the planet, was worth $32 billion when it collapsed in November 2022.
Alameda Research – a firm that was closely linked to FTX – had misappropriated customer funds in order to cover their own losses. This led to the implosion. Customers rushed to withdraw funds, but the exchange couldn’t keep up with the demand. They were forced to stop the withdrawals, and eventually file bankruptcy.
Sam Bankman Fried, the former CEO of FTX and founder of the company, was charged with criminal offenses as a result. Sam Bankman-Fried was convicted in November 2023 on several counts of fraud, conspiracy and misappropriation.
Other former FTX officials, such as Alameda Research CEO Caroline Ellison, and FTX founder Gary Wang pleaded to charges related to the case and worked with authorities.
Since taking over as CEO in November 2022, restructuring expert John J. Ray III has led efforts to locate and reclaim FTX’s lost assets. The lawsuits were filed against ex-executives, the money from donations to political parties and purchases of real estate was reclaimed, and FTX sold its remaining assets.
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