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FTX advances its bankruptcy proceedings with a significant creditor repayment scheduled for late September 2025, marking a critical milestone in the exchange’s restructuring efforts.
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The U.S. Bankruptcy Court has authorized the release of $1.9 billion in cash, enabling the next distribution phase to approved creditors, despite ongoing legal disputes over valuation and payout exclusions.
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According to COINOTAG, creditors remain divided over the valuation methodology, with many contesting the use of November 2022 crypto prices rather than current market values.
FTX prepares to distribute $1.9B to creditors by September 2025 amid legal challenges over valuation and payout exclusions, advancing its bankruptcy resolution process.
FTX Bankruptcy Progress: $1.9 Billion Distribution Set for September 2025
The FTX bankruptcy case continues to make tangible progress as the exchange gears up for its next major creditor repayment scheduled for September 30, 2025. This distribution will target holders of approved Class 5 (Customer Entitlement Claims), Class 6 (General Unsecured Claims), and certain Convenience Claims, with the record date for eligibility set on August 15, 2025. The U.S. Bankruptcy Court in Delaware recently approved the release of $1.9 billion in cash, a significant portion of the funds freed following a reduction in FTX’s disputed claims reserve from $6.5 billion to $4.3 billion. This liquidity injection reflects a key step in the broader reorganization plan confirmed in October 2024, which aims to repay up to $16.5 billion, including principal and 9% interest for most non-governmental creditors.
Operational Details and Creditor Requirements for Upcoming Payout
The distribution will be managed by FTX’s designated Distribution Service Providers—BitGo, Kraken, and Payoneer—who will oversee the disbursement process. Creditors must complete mandatory know-your-customer (KYC) verification, submit relevant tax documentation, and ensure proper registration by the August 15 deadline to qualify for payment. This structured approach aims to streamline the payout process while maintaining compliance with regulatory standards. However, certain jurisdictions, notably China and Russia, face legal restrictions that currently limit creditor access to these funds, with approximately $470 million in claims affected. These exclusions have prompted some creditors to explore legal avenues to challenge the restrictions, highlighting ongoing complexities in the bankruptcy resolution.
Valuation Controversies and Legal Disputes Among Creditors
A major point of contention among creditors involves the valuation methodology used for repayment calculations. FTX is repaying claims based on cryptocurrency prices at the time of bankruptcy in November 2022, when Bitcoin traded between $16,000 and $20,000. This approach contrasts sharply with the current market environment, where Bitcoin has surged to approximately $120,000, and many altcoins have experienced substantial gains. Creditors argue that this valuation method undervalues their claims, especially given the recovery of crypto markets since the collapse. Several claimants have initiated lawsuits seeking repayment based on current market values, citing FTX’s terms of service as justification. Nonetheless, the bankruptcy court has upheld the original valuation model, emphasizing the legal precedence of the bankruptcy date for asset valuation.
Asset Recovery and Implications for Creditor Payouts
Despite recovering an estimated $16.5 billion in assets, FTX’s bankruptcy estate reportedly held only a fraction of customer crypto holdings at the time of filing—approximately 0.1% of Bitcoin and 1.2% of Ethereum. This shortfall underscores the challenges in asset recovery and the impact on creditor payouts. The limited availability of original crypto assets necessitates reliance on cash distributions and other recovered funds, which shapes the overall repayment strategy. Creditors are advised to monitor ongoing court proceedings and ensure compliance with all administrative requirements to maximize their recovery potential.
Conclusion
FTX’s upcoming $1.9 billion distribution scheduled for September 2025 represents a pivotal advancement in the protracted bankruptcy process, offering creditors a tangible return after nearly three years of uncertainty. While legal challenges surrounding valuation and regional payout restrictions persist, the court-approved release of funds and structured repayment plan provide a clear framework for ongoing creditor compensation. Stakeholders should remain vigilant regarding deadlines and regulatory developments to safeguard their claims as the bankruptcy resolution progresses.
