Kraken and BitGo to Handle FTX Payouts Starting January 2025

The FTX bankruptcy estate has officially updated its timeline for creditor and customer repayments, with initial payouts slated to begin on January 3, 2025. This marks a major step in the long-awaited reimbursement process for users impacted by the collapse of the crypto exchange.

Under the new plan, crypto firms Kraken and BitGo will oversee the initial distribution of funds, ensuring a streamlined payout process. The first group of claim holders is expected to receive their repayments within 60 days of the effective date. For other customer groups still awaiting funds, additional announcements will provide clarity in the coming months.

“We are well positioned to begin executing the distribution of recoveries back to all customers and creditors, and encourage customers to complete the necessary steps to begin receiving distributions in a timely manner,” said FTX CEO John J. Ray III.

98% of Creditors to Receive Full Claim Value

The updated plan has garnered significant support among creditors, with 98% expected to receive at least 118% of their claim value in cash. Notably, approximately 94% of creditors in the “dot com customer entitlement claims” class – representing a staggering $6.83 billion in claims – voted in favor of the reorganization.

U.S. Judge Dorsey, who approved the plan in October, praised the process, calling it a “model case” for handling complex Chapter 11 bankruptcies.

Criticism Over Outdated Crypto Valuation

Despite broad approval, the payout plan has faced criticism from some creditors. The primary issue stems from the use of digital asset prices at the time of the creditor petition in 2022, which were significantly lower than todays values. For example, Bitcoin was valued at $16,000 when the petition was filed, compared to nearly $106,000 in 2024.

While some creditors pushed for payouts based on current crypto prices, David Adler, a lawyer representing affected parties, pointed out that FTX lacked the cryptocurrency reserves necessary to distribute funds in kind.

Lawsuits and Legal Fallout

In parallel with the payout plan, the FTX bankruptcy estate has launched a series of lawsuits targeting exchanges and individuals linked to the platforms collapse. High-profile cases include:

• A $50 million claim against KuCoin
• An $11 million suit against Crypto.com
• A $100 million complaint against Anthony Scaramuccis SkyBridge Capital over questionable deals with former FTX CEO Sam Bankman-Fried.

Additionally, Binance and its founder Changpeng Zhao are facing a massive $1.8 billion lawsuit, with allegations that Binance received $1.76 billion in fraudulent transfers prior to FTXs collapse in 2022.

Abandoned Plans for FTX 2.0

While discussions surrounding an FTX 2.0 reboot briefly emerged, the idea was ultimately shelved. Reports revealed that no investors were willing to commit the capital required to revive the platform.

As for former FTX CEO Sam Bankman-Fried, he was found guilty of fraud in November 2023 and sentenced to 25 years in prison.

Final Thoughts

The start of FTX‘s payout process in early 2025 offers a long-awaited resolution for the platform’s customers and creditors. With Kraken and BitGo at the helm, the process promises to be efficient and transparent. While some frustrations remain over outdated valuations, the 118% recovery rate provides a silver lining for most claimants. However, the ongoing lawsuits and the absence of an FTX 2.0 relaunch underscore the profound and lasting impact of one of cryptos most notorious collapses.