FTX's $1.6B Payout Sparks Legal Clash Over Crypto Valuation

FTX Trading Ltd. and the FTX Recovery Trust announced on September 19, 2025, that they will distribute approximately $1.6 billion to creditors on September 30, 2025, as part of the Chapter 11 Plan of Reorganization. This third distribution follows earlier payments and aims to settle claims under the reorganization frameworkFTX Recovery Trust to Distribute Approximately $1.6 Billion to Creditors in Third Distribution on September 30, 2025^[1]. The funds will be disbursed through three distribution service providers—Bitgo, Kraken, and Payoneer—with eligible creditors expected to receive their distributions within 1 to 3 business days after the payment dateFTX Recovery Trust Announces $1.6 Billion Distribution to Creditors^[3].

The distribution is structured according to the waterfall priorities outlined in the reorganization plan. Class 5A Dotcom Customer Entitlement Claims will receive an incremental 6% distribution, bringing their cumulative payout to 78%. Class 5B U.S. Customer Entitlement Claims will see a 40% distribution, reaching a total of 95% of their entitlements. Both Class 6A General Unsecured Claims and Class 6B Digital Asset Loan Claims will receive 24% of their outstanding amounts, cumulatively totaling 85%. Class 7 Convenience Claims, which are fully funded, will receive a 120% distributionFTX Recovery Trust to Distribute Approximately $1.6 Billion to Creditors in Third Distribution on September 30, 2025^[1].

To qualify for the payout, creditors must complete several pre-distribution requirements, including logging into the FTX Customer Portal, submitting Know Your Customer (KYC) verification, and onboarding with one of the designated service providers. These steps are mandatory for eligibility, and failure to complete them will disqualify creditors from receiving their share of the distributionFTX Recovery Trust to Distribute Approximately $1.6 Billion to Creditors in Third Distribution on September 30, 2025^[1]. Additionally, transferred claims will only be processed if the transferee’s name is officially recorded on the claims register, and the 21-day notice period has expired without objectionsFTX Recovery Trust Announces $1.6 Billion Distribution to Creditors^[3].

The reorganization process has faced challenges, including disputes over the valuation of cryptocurrency assets. FTX calculates repayments based on November 2022 prices, when Bitcoin traded between $16,000 and $20,000, despite current prices exceeding $120,000. This discrepancy has led to legal challenges from creditors seeking compensation based on current market valuesFTX Announces September 30 Date for Next $1.9 Billion Creditor Distribution^[4]. The court, however, has upheld the 2022 valuation model, citing the terms of FTX’s original reorganization planFTX Announces September 30 Date for Next $1.9 Billion Creditor Distribution^[4].

FTX also issued a phishing advisory, warning creditors to remain vigilant against fraudulent emails and websites mimicking the FTX Customer Portal. The company emphasized that it will never request wallet connections or sensitive personal informationFTX Recovery Trust to Distribute Approximately $1.6 Billion to Creditors in Third Distribution on September 30, 2025^[1]. Legal counsel for the FTX Recovery Trust includes Sullivan & Cromwell LLP and Alvarez & Marsal North America, LLC, who are overseeing the distribution processFTX Recovery Trust to Distribute Approximately $1.6 Billion to Creditors in Third Distribution on September 30, 2025^[1].

The September 30 distribution marks a significant milestone in FTX’s bankruptcy proceedings, which began after the exchange’s collapse in November 2022. The company’s founder, Sam Bankman-Fried, was convicted in 2023 on fraud-related charges. The reorganization plan, confirmed by the court in October 2024, allows for total repayments of up to $16.5 billion, including principal and 9% interest for most non-governmental creditorsFTX Announces September 30 Date for Next $1.9 Billion Creditor Distribution^[4].