FTX Set to Drop $16B Creditor Payouts: First Wave Hits in Feb

FTX has outlined how it will pay back $16 billion to creditors. The first payment will be in February and will be for creditors with claims under $50,000. According to insider Sunil Kavuri, the first payment will be around $1.2 billion as per the January 12 announcement.

FTX creditors will need to meet certain pre-distribution requirements including submitting tax withholding forms and completing KYC verification. Key dates are January 20 for pre-distribution steps and 60 days to finalize tax documentation. If you don’t meet these deadlines your payments will be withheld.

February start but payments will go through March 4. This is in line with FTX’s bankruptcy reorganization plan to provide clarity and fairness to smaller creditors.

Steps for FTX Creditors to Secure Payments

To streamline the process, FTX has shared a clear repayment protocol:

• Record Date: Claims must be verified as of January 3.

• Pre-Distribution Requirements:

  • Submit tax withholding forms (e.g., W-8BEN) and complete KYC.

  • Ensure compliance within 60 days to avoid forfeiture of funds.

• Initial Distribution: Focused on creditors with claims below $50,000.

Despite the structured plan, some creditors have raised concerns about phishing scams and fraudulent claim portals, emphasizing the need for vigilance.

Crypto Market Awaits Bullish Impact from Repayments

The FTX payment schedule has the crypto market buzzing. Analysts think creditors will put their payments back into major cryptos like Bitcoin and altcoins and fuel the market.

And with the US administration being pro-crypto and Bitcoin already at $100,000 FTX’s $16 billion will only add to the momentum.

FTX is still working on legal and operational issues. They recently clarified the situation with their EU subsidiary saying 100% of FTX EU shares are under FTX Europe AG’s control pending court approval.

Conclusion

FTX’s structured repayment plan provides a glimmer of hope for creditors while holding the potential to impact the broader crypto market. As the process unfolds, adherence to deadlines and due diligence will be critical for those awaiting payouts.