FTX is finally wrapping up its Chapter 11 bankruptcy nightmare. The once-dominant crypto exchange, which imploded in one of the most shocking financial collapses ever, announced it’s on track to start paying creditors and customers early next year.
Billions have been recovered so far, and the company says it’s ready to hit the “go” button on the long-awaited distributions. John J. Ray III, the man tasked with cleaning up FTX’s disaster, confirmed the timeline.
“We are pleased to announce that we will begin distributing proceeds in early 2025,” he said. The plan has been grinding its way through the courts for months, but the team behind it seems confident.
They’ve been working to recover as much as possible and are now finalizing deals with agents who’ll handle the payouts globally.
Distribution timeline and what’s next
FTX laid out its playbook for the coming months. In December, it plans to lock in agreements with specialized distribution agents. These agents will handle payouts to customers across supported jurisdictions.
Once that’s squared away, customers will need to set up accounts with these agents through FTX’s portal and complete KYC (Know Your Customer) verification. Tax forms will also be required—because, of course, taxes don’t skip bankruptcy.
By the end of December, FTX says it will announce the exact date the Chapter 11 plan officially takes effect. This depends on a court decision to approve the Disputed Claims Reserve Amount.
Without that approval, nothing moves forward. If all goes to plan, the effective date will fall in early January 2025. That’s when FTX flips the switch.
The first batch of payouts, called the Initial Distribution, is set for holders of claims in the Plan’s Convenience Classes. FTX has promised to send these distributions within 60 days of the effective date.
But here’s the catch, customers need to get their paperwork straight by the record date or risk missing out. The distribution record date will match the effective date, so there’s no room for procrastination.
Claims traders, listen up. Section 7.4.1 of the Chapter 11 plan has a clause that might trip you up. Claims traded within 45 days before the distribution record date could be left out of the claims register in time.
This could lead to payouts going to the wrong party. Bottom line: check your timing if you’re trading claims this late in the game.
The fallout: FTX executives face sentencing
As FTX inches closer to repaying its creditors, the courtroom drama surrounding its former executives is winding down. Gary Wang, FTX’s co-founder and former tech chief, became the final executive to face sentencing this week.
Wang was handed time served and three years of supervised release. He also has to cough up $11 billion for the government from the fiasco. He pled guilty to four criminal charges, including conspiracy to commit wire fraud and securities fraud.
Wang faced up to 50 years behind bars, but his sentence was significantly reduced thanks to his cooperation with prosecutors. He took the stand against Sam “SBF” Bankman-Fried, FTX’s infamous founder, and didn’t hold back.
During his sentencing, Wang apologized, saying he chose the “cowardly path” and that he plans to spend the rest of his life trying to make things right. His wife, who’s expecting their first child, and his parents were in the courtroom for support.
Not all of FTX’s former execs got off as easily. SBF, the face of the scandal, was sentenced to 25 years in prison earlier this year. He was also ordered to pay $11 billion, mirroring Wang’s financial penalty.
Caroline Ellison, the ex-CEO of Alameda Research and SBF’s ex-girlfriend, got two years in prison for her role. Ryan Salame, another key player in the collapse, was slapped with a seven-and-a-half-year sentence.
Judge Lewis Kaplan, who has overseen all the FTX cases, called the cooperation from Wang “unlike anything I’ve ever seen.”
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