The bankruptcy of FTX was a real earthquake in the history of the cryptosphere. It has deeply shaken investor confidence and exposed major structural flaws within the industry. Almost two years after its collapse in November 2022, the bankrupt exchange returns to the forefront with an ambitious reorganization plan, recently validated by the American justice system. This plan provides for an unprecedented repayment of creditors, which will begin on January 3, 2025, with a promise of restitution of up to 118% of declared debts. To orchestrate this operation, FTX relies on recognized players in the sector. Kraken, accustomed to this type of procedure after having played a key role in the management of the Mt. Gox affair, and BitGo, an expert in secure crypto custody, were chosen to manage the reimbursements. Their involvement offers both security and transparency, two essential values for regaining the confidence of creditors and easing persistent tensions.
Structured repayment for creditors: a strong signal
FTX has unveiled a structured repayment plan which aims to regain eroded investor confidence since its bankruptcy in November 2022. Validated by the Delaware bankruptcy court last October, this project is part of the US Chapter 11 and provides the start of repayments from January 3, 2025. According to the details of the plan, creditors will be able to recover up to 118% of their declared debts, a prospect which contrasts with the usual scenarios of bankruptcies in the crypto industry.
John J. Ray III, the CEO currently leading FTX's restructuring, said specified the extent of the work accomplished: “our efforts over the past two years have enabled us to recover billions of dollars intended for creditors and customers”. Behind this declaration, we can measure the extent of the steps taken to identify and secure lost funds, while cleaning up a financial system previously marked by major failures and opaque management.
A key element of this plan relies on the involvement of Kraken and BitGo, two companies recognized for their expertise in crypto management. Kraken, a historic player in the sector, has already demonstrated its capabilities during the Mt. Gox affair. In fact, the company contributed to the return of creditors' funds in a secure manner. The American exchange also declared: “we are happy to participate in this process thanks to our expertise in asset recovery and distribution”.
As for BitGo, a specialist in the secure storage of cryptos, the company highlights strict security protocols to guarantee the integrity of operations. Mike Belshe, its CEO, insists on this commitment: “we have protected billions in assets for institutions and we will continue to act with the highest level of responsibility and integrity”. This strategic alliance aims to reassure creditors about the reliability of the repayment process, and to ensure total transparency at each stage.
By choosing strong partners, FTX intends to fulfill its obligations to creditors, but also demonstrate its desire to turn the page on a scandal that has deeply shaken the cryptosphere. This structured reimbursement plan thus constitutes a first concrete response for the thousands of victims, while laying the foundations for an ambitious reorganization.
Strict conditions and a regulated framework for reimbursements
To ensure structured and transparent repayment, FTX has established a series of rigorous procedures for eligible creditors. The latter will have to connect to the dedicated platform, the FTX Customer Portal, in order to validate their identity through the KYC (Know Your Customer) process. In addition to this identity verification, they will have to submit the required tax forms and choose between reimbursement in cash or crypto, depending on the options available and the regulations in force. This approach leaves no room for ambiguity: payments will be strictly reserved for registered holders of claims on January 3, 2025. By imposing these conditions, FTX seeks to prevent any legal risk and guarantee traceability irreproachable redistributed funds.
This strict framework occurs in a context where investors' memories remain marked by the excesses and excesses of past management. Accusations of fund abuse and poor governance continue to haunt FTX's reputation. For example, Sam Bankman-Fried, its former CEO, was sentenced last November to 23 years in prison for fraud. This sentence shed light on the extent of the scandal, and highlights the shortcomings of a hitherto fragile and poorly regulated financial system.
However, under the leadership of John J. Ray III, FTX is undertaking colossal work to turn the page on this fiasco. Since taking office, Ray and his team have successfully recovered and secured billions of dollars for the benefit of creditors. This reorganization plan goes well beyond a simple return of funds. It could serve as a unique model for the management of bankruptcies in the crypto industry, often criticized for its opacity and lack of regulation.
With this offer of reimbursements of up to 118% of declared debts, FTX is laying the foundations for a new standard for bankruptcy procedures. If this project is successful, it will demonstrate that it is possible to restore confidence in a market seeking stability. Conversely, any failure or delay would risk amplifying investor mistrust and compromising the efforts undertaken to date. In a rapidly changing sector, the outcome of this plan will be crucial for the future of the cryptosphere and its relations with regulators.
The announcement of a reimbursement likely to reach 118% of debts raises major questions for the future of the cryptosphere. If this initiative succeeds, it could strengthen the credibility of bankruptcy procedures and establish a new legal benchmark for companies in difficulty. Conversely, any delay or failure would risk reviving investor mistrust, already shaken by past scandals. This reorganization plan therefore goes beyond the simple framework of FTX: it could serve as a financial precedent for the industry, with a view to accentuating the need for stricter regulation and transparent management.
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