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Journalist
Hassan Shittu
Journalist
Hassan Shittu
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FTX Digital Markets, the Bahamian subsidiary of the collapsed cryptocurrency exchange FTX, will begin repaying creditors next week.
The repayment process follows FTX’s reorganization plan, which took effect on January 3 after years of bankruptcy proceedings and litigation to recover funds.
FTX Creditors Must Meet KYC & Tax Requirements Or Risk Missing Repayments
According to a February 14 X post from FTX Creditor Champion, Sunil Kavuri, the first batch of repayments will be processed on February 18, 2025.
These repayments will target claims under $50,000 classified as “convenience class” creditors. These individuals will receive 119% of their adjudicated claim value, totaling $1.2 billion in distributions.
While smaller claims will be prioritized, larger claims exceeding $50,000 are expected to be addressed in later distributions, likely beginning in the second quarter of 2025.
An estimated $17 billion will be disbursed in stages, with an initial payout of $7 billion projected for larger claimants.
FTX customers eligible for repayment must complete Know Your Customer (KYC) verification, submit a W-8 BEN tax form, and onboard with a designated distribution partner, BitGo or Kraken.
Those who fail to meet these requirements will not be included in the February 18 distribution but may qualify for future payouts if outstanding issues are resolved.
Notably, Kavuri has earlier stated that FTX has already notified customers who did not meet the requirements for the upcoming distribution.
Excluded creditors include those still under review, claims exceeding $50,000, or individuals who have not completed the necessary KYC, tax, or distribution provider steps.
The repayment timeline remains uncertain for these groups, but further distributions are expected in the coming months.
The distribution notice provided by Kavuri indicated that creditors receiving funds through BitGo could expect full repayment of their adjudicated claim value and 9% annual interest accrued since November 2022.
However, it remains unclear whether Kraken, which is also assisting in the fund distribution process, will follow the same schedule.
The anticipated repayments are crucial for those affected by the FTX collapse. Many creditors have waited for compensation for more than two years. If all claims are fully processed, FTX could be expected to pay over $16 billion to affected users.
FTX Executives Sentenced: Where Are They Now?
FTX, once a dominant force in the crypto exchange space, collapsed in November 2022 after facing a severe liquidity crisis. Within days, the company filed for bankruptcy, and its CEO, Sam Bankman-Fried (SBF), stepped down. He was later convicted and sentenced to 25 years in prison.
Among those affected was investor Kavuri, who claimed to have endured two years of financial distress after losing over $2 million in FTX’s downfall.
Legal proceedings against four other former FTX and Alameda Research executives wrapped up by the end of 2024. This led to Caroline Ellison and Ryan Salame receiving prison sentences, while Nishad Singh and Gary Wang were given time served.
FTX’s restructuring plan, approved in October 2024, prioritized repayments to users with claims under $50,000. Around 98% of affected users will receive 119% of their declared funds.
However, some creditors argue that compensation based on bankruptcy-era crypto prices is unfair, especially given Bitcoin’s 370% surge since then.
