Original author: Pzai, Foresight News
FTX’s fate has come to an end.
On February 8, the collapsed cryptocurrency exchange abandoned its restructuring plan and announced that it would begin paying its first batch of creditors.
FTX stated on its official social platform: It will begin making initial distributions to creditor holders allowed in its Chapter 11 Reorganization Facility Class Plan on February 18, 2025. Eligible creditors should expect to receive distributions within 1 to 3 business days from February 18, 2025.
FTX is a crypto exchange founded by former Wall Street trader Sam Bankman-Fried (SBF) in 2017. It has a huge influence in the US market and was once the worlds second largest cryptocurrency trading platform, second only to Binance. However, after the chaotic financial situation between it and Alameda, another crypto company founded by Sam Bankman-Fried, was exposed, it went bankrupt after a run in just one week.
Since FTX went bankrupt in 2022, Sam Bankman-Fried and his FTX have hastily stepped into the dust of history. The FTX bankruptcy reorganization plan, which involves the assets of tens of thousands of users, has gone through twists and turns since 2023, and finally ushered in key progress in 2025.
According to the previous restructuring plan, FTX creditors are expected to receive full or even excess cash compensation, and the initial distribution launched on February 18 undoubtedly brought hope to the long-awaited creditors.
Compensation Plan Details
According to Bloomberg, for the specific compensation plan, small creditors (claims of no more than $50,000) account for 98% of the total number of creditors, and they will receive 118% compensation, that is, the principal plus 9% annual interest. For large creditors, the compensation ratio varies according to the type of claim, up to 142%.
In addition, non-government creditors will also receive compensation for principal plus interest. This compensation plan is designed to maximize the interests of creditors and reduce their losses. Creditors need to complete KYC verification and receive funds through agents such as Bitgo and Kraken within the specified time before January 20, 2025 to ensure the authenticity and legitimacy of their identities.
One of the responsible agencies for this compensation is the well-known auditing agency PwC, which said that eligible customers/creditors in supported jurisdictions will be invited to create a BitGO account and receive their distributions in this account. Compensation for non-corporate customers/creditors is expected to begin in the second quarter of 2025.
However, in the previous process, some creditors raised objections to the compensation method, mainly focusing on the choice between cash compensation and cryptocurrency compensation. On December 26, 2023, the administrator of the FTX bankruptcy case submitted a revised reorganization application to the court. The FTX bankruptcy administrator proposed to use the US dollar as the unit of asset calculation to estimate the customers crypto asset claims. In addition, the relevant assets will be valued based on the base price determined on the bankruptcy date (November 11, 2022).
The plan also provides for additional interest payments to creditors as long as funds remain after claims are paid in full, according to court documents.
FTX’s “Crypto Legacy”
As one of the leading cryptocurrencies at the time, FTX left behind a lot of legacy after its collapse.
According to multiple media reports, on May 7, 2024, the company submitted a revised reorganization plan to the U.S. Bankruptcy Court, showing that once all asset sales are completed, the company will have $14.5 billion to $16.3 billion in funds available. FTX currently owes customers and other non-government creditors about $11 billion. This also means that FTXs creditors are expected to receive the fiat currency value of their crypto assets at the time of bankruptcy.
So will such a huge amount of funds have a certain impact on the market in the future?
According to Arkham data, FTX still has $1.3 billion in crypto assets, of which more than 50% are FTT, worth $526 million. The total market value of FTT tokens is currently about $700 million. Once FTX liquidates, the token will suffer a devastating blow.
As for the most critical Bitcoin and Ethereum assets, Arkham data currently shows that FTX does not hold the relevant assets. The trading volume of other tokens is also relatively bleak. The top few holding tokens such as OXY, MAPS, and MEDIA have almost no liquidity, so the potential liquidation of these assets has little impact on the overall cryptocurrency market.
However, it is worth noting that on February 12, according to Embers monitoring, FTX/Alameda conducted a monthly SOL redemption and transfer 6 hours ago: 184,162 SOL were redeemed from the pledge and distributed to 23 addresses. Since November 2023, the FTX/Alameda pledge address has redeemed and transferred a total of 4.629 million SOL in the above method, with an average transfer price of US$116.2. Currently, the FTX/Alameda pledge address still has 6.338 million SOL in the pledge, worth US$1.27 billion. It is not clear how this asset will be disposed of.
Another interesting news shows that paying creditors’ assets has not only become FTX’s final mission, but also its “get out of jail free card”. In August 2024, a New York judge finally approved the defunct cryptocurrency exchange FTX and its sister trading company Alameda Research to repay $12.7 billion to FTX creditors as part of a settlement with the U.S. Commodity Futures Trading Commission (CFTC). The CFTC’s $4 billion claim comes after creditors and interest, and the money paid to the CFTC will be transferred to the Supplemental Relief Fund to compensate severely damaged cryptocurrency holders (only paid if there are sufficient funds).
