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The long-awaited resolution for nearly $16 billion in funds owed to users and customers of the defunct crypto exchange FTX is approaching, as the estate managing the recovery process has outlined the next steps and timeline for distribution.
FTX Nears Completion Of Chapter 11 Plan
In Thursday’s announcement, FTX confirmed that it is nearing the completion of the final prerequisites necessary for its Court-approved Chapter 11 Plan of Reorganization to take effect, marking a significant milestone toward initiating creditor and customer distributions.
John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of the FTX Debtors, expressed optimism about the upcoming distributions, saying that they will begin distributing proceeds in “early 2025”.
Ray emphasized that the timeline reflects the diligent efforts of the team working on behalf of FTX’s creditors and customers, who have reportedly recovered “billions of dollars to date.” He reassured stakeholders that the team is committed to maximizing recoveries and is actively working to finalize arrangements with distribution agents to expedite the return of funds.
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FTX provided updates on the anticipated timeline for these distributions. In early December, the estate expects to finalize agreements with specialized distribution agents tasked with facilitating the global distribution of recoveries to customers in supported jurisdictions.
At that time, FTX will provide detailed instructions for affected customers on how to establish an approved account with these agents through the existing customer portal.
What Customers Must Know
By the end of December, FTX plans to announce the exact effective date for the distributions, contingent upon a Court Order that will approve the Disputed Claims Reserve Amount—a necessary step outlined in the Confirmation Order. The current expectation is for the Plan to be effective in early January 2025.
Following this, the first distribution will be made to holders of allowed claims in the Plan’s Convenience Classes within 60 days. Importantly, the distribution record date will coincide with the effective date, meaning customers will need to be prepared to act swiftly.
For customers to qualify for the initial distribution, they must establish an approved account with a distribution agent and complete Know Your Customer (KYC) verification, along with submitting the required tax forms before the distribution record date.
Additionally, claims traders should be aware of specific provisions in the Plan regarding trades made within 45 days prior to the distribution record date.
Claims traded during this period may not be reflected on the claims register by the end of business on the distribution record date, which could result in distributions being made to the original claim holders rather than the current traders.
FTT Price Reacts To Distribution Announcement
At the time of writing, FTX’s native token, FTT, is trading at $2.36, reflecting a substantial surge of nearly 10% within the past 24 hours.
Over a longer time frame, the token has posted impressive gains, rising around 40% over the past fourteen days and 18% over the past thirty days, in line with the broader market rally following President-elect Donald Trump’s victory on 5 November.
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Data from CoinGecko further indicates that FTT has experienced a significant rise in trading volume over the past 48 hours, which has surged by 38%, resulting in over $135 million traded during this period.
However, it is important to note that FTT’s current price remains significantly below its all-time high of $84, reached during the bull market of September 2021, marking a decline of over 97% from its peak value.
Featured image from DALL-E, chart from TradingView.com