FTX Begins User Repayments as Bankruptcy Plan Takes Effect

The long-awaited repayment process for users of the defunct cryptocurrency exchange FTX has officially begun as the company’s reorganization plan came into effect on January 3.

This development marks a significant step in FTX’s ongoing bankruptcy proceedings, allowing eligible users to start receiving reimbursements.

FTX debtors issued a warning on social media, advising users to be cautious of phishing scams disguised as official communication from the exchange. To qualify for repayments, customers must have filed claims through the designated website. According to FTX, the initial group of users could start receiving their funds within 60 days.

The plan prioritizes repayments for a group referred to as “convenience classes,” consisting of users with claims of $50,000 or less. Approved in October, the reorganization plan promises to reimburse 98% of users with 119% of the declared value of their funds at the time of bankruptcy.

This repayment effort is one of the final stages in the FTX saga, which began with its collapse and bankruptcy filing in November 2022. The fallout has seen several high-ranking executives face legal consequences for defrauding users, with prison sentences handed down to figures such as former CEO Sam Bankman-Fried and Alameda Research CEO Caroline Ellison.

Not all stakeholders are satisfied with the repayment plan. Critics have raised concerns about the valuation of cryptocurrency holdings, which are based on prices from 2022 when the exchange filed for bankruptcy. Since then, the price of Bitcoin has surged by over 400%, further fueling discontent among some creditors.