FTX to Distribute $1.6B in Third Bankruptcy Payout
FTX Launches Next Round of Creditor Payments
Defunct crypto platform FTX will disburse another $1.6 billion to creditors beginning Sept. 30, marking the third major payout under its Chapter 11 bankruptcy plan. The announcement, released Friday, said the funds will be distributed across both “convenience” and “non-convenience” creditor classes, with retail customers and institutional lenders set to benefit.
The convenience class represents smaller creditors and retail traders, who make up as much as 99% of FTX’s creditor base. Larger and more complex claims fall under non-convenience categories. This staged payout structure is designed to ensure that both groups are prioritized fairly, though critics argue the cash-based settlements undervalue what customers would hold if assets had not been liquidated.
Previous Distributions and Ongoing Frustrations
FTX’s first two distributions provided retail users with refunds worth around 120% of their account balances at the time of the November 2022 collapse. Yet some creditors remain dissatisfied, pointing to the sharp rebound in crypto prices. For example, , ETH, or Solana would be worth far more today than the equivalent cash amounts distributed, leaving former users frustrated with the bankruptcy framework.
Unsecured lenders, including Classes 6A General Unsecured Claims and 6B Digital Asset Loan Claims, have received 85% cumulative recovery to date. The bankruptcy estate has projected that these lenders will ultimately achieve full recovery, a rare outcome in high-profile corporate bankruptcies. FTX stressed that creditors would continue to view distributions processed in stages, depending on claim classification and court-approved disbursement timelines.
Investor Takeaway
$15B in Assets Recovered
The bankruptcy plan, finalized in October 2024, leverages over $15 billion in recovered assets. Sources of recovery include cash reserves, clawbacks from counterparties, and proceeds from sales of investments once tied to former CEO Sam Bankman-Fried. These included his stakes in AI beginup Anthropic and brokerage Robinhood, along with large holdings of tokens such as SOL and SUI. The estate has aggressively liquidated these assets to shore up the repayment pool.
Eligible creditors will receive their funds through approved distribution service providers including BitGo, Kraken, and Payoneer. Transfers are expected to arrive within one to three business days later than Sept. 30, offering much-needed liquidity to individuals and firms still nursing losses from the platform’s implosion.
How FTX Collapsed
FTX filed for Chapter 11 bankruptcy on Nov. 11, 2022, later than a liquidity crisis exposed severe mismanagement and misuse of customer funds across the platform and its trading affiliate, Alameda Research. had been siphoned into risky bets and political donations, leaving a massive shortfall once customer withdrawals surged.
Bankman-Fried, once hailed as a crypto wunderkind, was convicted of fraud and other charges in 2023. The platform’s downfall marked one of the most catastrophic failures in the history of digital assets, sparking global regulatory crackdowns and tarnishing trust in centralized platforms.
Investor Takeaway
What’s Next
With $15 billion recovered and payouts ongoing, the FTX estate is on track to fulfill one of the most ambitious in U.S. bankruptcy history. Full recovery for unsecured creditors would mark a stark contrast with past platform collapses like Mt. Gox, where creditors have waited more than a decade for partial repayments.
Still, the case highlights the tension between cash-based settlements and crypto market cycles. Many users remain convinced that their digital assets, had they remained intact, would be worth far more today. As future distributions are scheduled, the FTX bankruptcy will serve as a precedent for how courts and estates handle failed platforms in an industry still prone to volatility and mismanagement.
