FTX Resumes Customer Repayment for Convenience Class
Defunct cryptocurrency exchange FTX has restarted its customer recovery process, targeting the convenience class in the initial distribution.
The FTX bankruptcy estate initiated its reorganization plan on January 3. Starting from Friday, the team will fully resume the procedures involved in repaying affected investors in the exchange’s bankruptcy filing in November 2022.
This resumption marks a crucial stage in the process, which has undergone several legal proceedings. The initial phase will focus on holders of allowed claims in the convenience distribution.
Repayment Process in Full Swing
With the reorganization in full effect, the estate has called on the convenience class of the allowed claims to complete the pre-distribution process. For reference, the convenience class refers to a group of FTX’s allowed claims creditors with less than $50,000 worth of claims in the bankruptcy proceeding.
Importantly, this stage requires distribution claimants to meet KYC (Know Your Customer) requirements, submit a tax form, and choose a distribution service provider. In the meantime, the convenience creditors have until January 20 to fulfill these pre-distribution criteria or they will miss out on the initial repayment process.
Any claimant in this category who fails to meet the requirements will receive reimbursement in the subsequent distribution process. Furthermore, repayment for this class will run for 60 days from the start date, and creditors are expected to receive a total of $1.2 billion.
Convenience Creditors to Receive 119% Repayment
According to the court ruling, the FTX bankruptcy estate will fully repay creditors in the convenience class and provide additional incentives. Claimants in this category will receive 119% of the value of their assets on the day the defunct exchange filed for bankruptcy.
Notably, Kraken and BitGo are the only available distribution service providers. The exchanges will allow users to withdraw in US dollars or convert claims to cryptocurrencies.
Meanwhile, details for other creditor classes are currently unavailable. However, some expect the process to resume immediately after the distribution to the convenient creditor class.
FTX announced in December that it had raised over $14 billion and intends to fully compensate users.