The FTX bankruptcy estate has finally released a timeframe to commence repaying creditors of the fallen crypto exchange FTX. According to recently disclosed notes from FTX Digital’s Joint Official Liquidation, creditors will begin receiving assets from the end of this year.
How Will the Repayment Be Handled?
The FTX bankruptcy comprises two parallel entities – the Chapter 11 bankruptcy in a Delaware court and the official liquidation process of FTX Digital, a Bahamas-based FTX division. Both entities joined forces to process creditors’ withdrawal requests and ensure they received the complete amount.
Weeks ago, the bankruptcy estate opened the doors for FTX creditors to submit a claim to request reimbursement of their assets stuck in the crypto exchange since its crash in November 2022. It was decided in an initial meeting that creditors can apply between March 1st and May 15th. However, the latest notes show that a “provisional deadline for claim submission” will likely allow for an extension to at least June 2024.
Additionally, these creditors will receive the worth of their funds on the same date of the bankruptcy filing, regardless of the cryptocurrency. For example, an investor who owned 1 BTC at the time of the collapse will receive around $16,800, since that was Bitcoin’s value on November 11th, 2022. The value is significantly lower than the current amount of these assets. BTC, for instance, is currently valued at around $69,000.
The notes explained that only creditors with admitted claims and verified Know Your Customer (KYC) documentation will receive their funds by the year-end.
FTX: From Hero to Zero
Under the leadership of its founder, Sam Bankman-Fried, FTX went from being a multi-billion dollar crypto exchange to a bankrupt firm. The sudden crash was pegged to a mismanagement of funds and a lack of liquidity when users processed withdrawals. As the crypto empire collapsed, the crypto market took a big hit, and the company’s founder was arrested.
Fast forward to the present, the infamous FTX founder has been sentenced to 25 years in federal prison over charges involving fraud and other criminal offences.
