FTX Creditors to Get $4.3B Payout After $1.9B Claims Reduction Approved

FTX creditors are set to receive a $4.3 billion payout on September 30 following a U.S. bankruptcy court’s approval of a $1.9 billion reduction in disputed claims. The decision, announced on August 15, clears the way for a major disbursement to eligible claimants who meet the court’s conditions. Claimants must have passed the record date and hold approved claims to qualify for the distribution, which includes holders of Class 5 Customer Entitlement Claims, Class 6 General Unsecured Claims, and Convenience Claims [1].

The court’s action was a crucial step in streamlining the payout process and managing the distribution of limited assets among creditors. The reduction was designed to prevent overpayment and ensure a fairer and more orderly distribution [1]. This development marks a significant milestone in the restructuring of FTX, one of the most complex bankruptcy cases in the crypto industry.

To qualify for the payout, claimants must complete Know-Your-Customer (KYC) checks and register with approved distribution providers such as BitGo, Kraken, and Payoneer. Failure to comply with these requirements will disqualify claimants from receiving their share of the distribution [1]. The FTX Recovery Trust has also emphasized the importance of claimants verifying their status and ensuring all documentation is complete before the distribution date.

Creditors from restricted jurisdictions remain excluded from the payout, including those from China, Russia, Ukraine, and Pakistan. These jurisdictions account for approximately $470 million in claims. The FTX Recovery Trust has stated that these claims will remain on hold until further resolution [1]. Some creditors, unable to meet the requirements or seeking faster access to liquidity, have opted to sell their claims through third-party platforms such as Backpack Exchange, Figure Market, and X claim [1].

The court’s decision is seen as a potential precedent for future crypto-related bankruptcies, particularly in cases involving large numbers of creditors and complex claims. Analysts have noted that while the payout increases the likelihood of a meaningful recovery, it does not guarantee that all creditors will receive the full value of their claims [1]. The restructuring highlights the need for stronger governance, risk management, and regulatory oversight in the crypto sector.

As the industry continues to evolve, the FTX case is expected to shape future practices and policies, potentially leading to a more resilient and accountable crypto ecosystem. The $4.3 billion payout not only reflects the scale of FTX’s former operations but also the challenges of managing such a large and complex financial collapse [1].

Source: [1] FTX Creditors Set for $4.3B Payout as Court Approves Claims Reduction (https://cryptofrontnews.com/ftx-creditors-set-for-4-3b-payout-as-court-approves-claims-reduction/)