FTX’s Payment Plan Takes Effect — When Can Users Expect to Receive Their Funds?

The reorganization plan for the defunct cryptocurrency exchange FTX has officially taken effect as of January 3, allowing users to begin receiving repayments as part of the ongoing bankruptcy proceedings. The plan marks a critical step in resolving the financial fallout from FTX’s collapse in late 2022.

Who Will Receive Funds First?

FTX's debtors announced that users who filed claims for amounts under $50,000 are expected to receive their funds within 60 days. These users belong to an initial group referred to as "convenience classes." This group is the first to receive repayments as part of the plan approved in October 2024. The reorganization plan, which aims to return funds to FTX’s users, specifies that 98% of affected users should receive 119% of the declared value of their claims.

Customers seeking reimbursement must have filed their claims through FTX's official website to be eligible. FTX has advised users to be cautious of phishing scams, with fraudulent emails designed to appear as though they are sent from the exchange.

The FTX Saga Continues

The beginning of repayments represents a significant chapter in the aftermath of FTX’s bankruptcy, which was triggered when the exchange filed for Chapter 11 protection in November 2022. The collapse sent shockwaves through the cryptocurrency industry and led to multiple criminal charges against FTX executives for defrauding users.

At the time of publication, Cointelegraph was unable to confirm that any users had yet received repayments from the plan, but the process has now officially begun.

Criticism of the Reorganization Plan

While many creditors are welcoming the progress, there has been some criticism of the reorganization plan, particularly with regard to how repayments are calculated. The plan stipulates that reimbursements will be based on the value of the cryptocurrencies held by FTX at the time of its bankruptcy in 2022. This decision has caused frustration for some users, as the price of Bitcoin (BTC) has surged by over 400% since then, leading to concerns that users may be receiving less than they would have had the repayments been based on current market prices.

Ongoing Legal and Financial Repercussions

The road to repayment also comes after the sentencing of several FTX executives involved in the exchange's downfall. Former CEO Sam Bankman-Fried, along with former Alameda Research CEO Caroline Ellison and former FTX Digital Markets co-CEO Ryan Salame, have all been sentenced to prison for their roles in the fraud. However, only two executives—former engineering director Nishad Singh and co-founder Gary Wang—escaped prison time.

Bankman-Fried filed an appeal against his conviction, which has kept the legal drama surrounding FTX ongoing.

Collaborations for Distribution

To facilitate the distribution of funds, crypto firms BitGo and Kraken announced in December that they would assist in the process of returning recoveries to FTX users. If all users file complete claims, the exchange may end up paying approximately $16 billion in total.

The FTX saga, which has been closely followed by the crypto community, is far from over. With repayments now underway, affected users are hopeful that the long-awaited process of financial restitution will continue to progress, even as legal and regulatory issues linger.