FTX to distribute another $2.2 billion to creditors starting March 31

FTX is planning to distribute another $2.2 billion to creditors beginning at the end of the month, according to an announcement on Wednesday. This marks the fourth distribution for the bankrupt exchange, which has already repaid over $6 billion to former users and investors.  

Eligible recipients in the Chapter 11 bankruptcy plan’s Convenience and Non-Convenience classes are expected to receive their funds within three business days from distribution service providers BitGo, Kraken or Payoneer starting March 31. 

The exchange’s convenience class typically refers to the retail traders and smaller creditors who comprise the vast majority of FTX’s creditor base, whereas the non-convenience designation involves larger or more complex claims.

FTX’s bankruptcy estate has generally tried to repay retail creditors between 118% and 142% above the value of their holdings at the time of the exchange’s collapse in 2022, though it has also faced criticism for not repaying assets in kind. 

The price of bitcoin dropped to a long-term low near $15,760 on Nov. 21, 2022, around the time FTX founder Sam Bankman-Fried stepped down as chief executive and the exchange declared bankruptcy. 

In the latest distribution round, FTX will also boost expected returns for other non-convenience classes. “Class 5A,” i.e., “Dotcom Customer Entitlement Claims,” will receive an additional 18%, bringing returns to 96% of their total losses at the 2022 petition date. 

Additionally, Class 5B U.S. Customer Entitlement Claims were boosted 5% while both Classes 6A General Unsecured Claims and 6B Digital Asset Loan Claims were raised 15%, all to effectively be made whole at 100%. 

Class 7 convenience claims will once again receive a cumulative 120% distribution.

Bankman-Fried’s bankruptcy?

U.S. Judge John Dorsey approved FTX’s bankruptcy plan in 2024, about a year after Bankman-Fried was found guilty in November 2023 of seven criminal counts and sentenced to nearly 25 years in prison.

Bankman-Fried has been an outspoken critic of the FTX’s bankruptcy plan from behind bars, claiming that FTX was never insolvent and could have resolved its liquidity issues. He has also claimed that hired lawyers forced FTX into bankruptcy.

A court document submitted by SBF’s legal team claimed the FTX estate has paid nearly $1 billion in fees to consultants and significantly mispriced assets that it had sold off, including a minor stake in the AI studio Anthropic. 

Although Bankman-Fried has taken to praising President Donald Trump, the White House has said it has no plans to pardon the disgraced founder.

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