FTX Begins $5 Billion Payout to Claim Holders in Bankruptcy Recovery

FTX, a once prominent but now defunct crypto exchange, has launched a second distribution of over $5 billion to creditors, an important step in its bankruptcy proceedings. Announced on May 30, 2025, this distribution targets holders of allowed claims in the Convenience and Non-Convenience Classes who have met pre-distribution requirements, as outlined in the company’s Chapter 11 Plan of Reorganization.

Eligible creditors can expect funds through distribution service providers which are crypto exchanges Bitgo or Kraken within one to three business days. FTX has pledged to announce future distribution dates, ensuring stakeholders remain informed throughout the process. The distribution follows a structured priority system, with Class 5A Dotcom Customer Entitlement Claims receiving a 72% payout, Class 5B U.S. Customer Entitlement Claims at 54%, Classes 6A General Unsecured Claims and 6B Digital Asset Loan Claims each at 61%, and Class 7 Convenience Claims at 120%. John J. Ray III, Plan Administrator for the FTX Recovery Trust, emphasized the ongoing success of recovery efforts, with work continuing to maximize creditor returns and resolve outstanding claims.

The bankruptcy follows the collapse of FTX, orchestrated by its founder, Sam Bankman-Fried, a former billionaire who positioned himself as a champion of effective altruism. Bankman-Fried, once hailed as a crypto prodigy, was convicted in November 2023 on seven counts of fraud and conspiracy for misappropriating $8 billion in customer funds. Sentenced to 25 years in prison and ordered to forfeit around a billion in assets, his actions triggered FTX’s downfall, sending shockwaves through the crypto industry.

His story of ambition and deceit continues to captivate public interest, cementing his role as a cautionary figure in crypto. Adding to the story’s cultural impact, Netflix announced yesterday a new drama series called The Altruists, which will explore the rise and fall of FTX, focusing on Bankman-Fried and Caroline Ellison’s roles in the $8 billion fraud.

Navigating the FTX Bankruptcy Process

FTX’s path to this distribution began in November 2022, when it and 101 affiliated debtors filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. Several affiliated cases have been dismissed, with remaining cases now overseen by Judge Karen B. Owens.

Key milestones include the approval of the Disclosure Statement in June 2024, plan confirmation in October 2024, and the plan’s effective date on January 3, 2025. Creditors seeking future distributions must log into the FTX Customer Portal, complete Know Your Customer (KYC) verification, submit tax forms, and onboard with Bitgo or Kraken.