FTX, once one of the biggest crypto exchanges, filed for Chapter 11 bankruptcy in the U.S. back in November 2022. The collapse stunned the crypto world: billions in reserves were missing or mismanaged, and many users found themselves unable to withdraw their funds.
Investigators later discovered that Alameda Research — a trading firm tied to FTX’s ex‑CEO Sam Bankman‑Fried — had large holdings in FTX’s own token (FTT), embedding extra risk into their finances. When instability came to light, users rushed to pull funds, triggering a crypto “bank run” that FTX couldn’t survive.
After months of legal wrangling, asset recovery, and bargaining with creditors, FTX’s bankruptcy plan was approved in October 2024. That plan laid out a path for staged repayments. It officially went live on January 3, 2025, and from that moment, distributions began happening.
How the Repayment Plan Works (And Who Qualifies)
Under the approved plan, payments follow a “waterfall” model — in other words, certain classes get paid first. Clients who held balances of up to $50,000 were prioritized, with the promise of payouts within 60 days of the plan’s effective date, to offer faster relief for smaller losses. But here’s the catch: all reimbursements are based on the value of accounts as of November 2022, which has caused friction — especially after the crypto market rose significantly.
Since the plan’s activation, FTX has completed multiple phases of partial distributions. In each round, different creditor classes receive different percentages depending on their category and the specific terms.
For the third distribution, scheduled for September 30, 2025, around $1.6 billion is slated for eligible claimants. Here’s how it’s divided:
- U.S.-based clients (Class 5B): ~40% in this round, totaling ~95% recovery overall
- International “dotcom” clients: ~6% extra, bringing their cumulative recovery to ~78%
- General unsecured and digital asset loan claims: ~24% this time, reaching ~85% in total
- Convenience class (small creditors): potentially over 100%, up to ~120%
These allocations emerged from marathon negotiations between creditors, attorneys, and the court overseeing the process.
Legal Updates, Settlements & Asset Recovery
Beyond just handing out funds, FTX has been pursuing strategies to recapture assets and bolster the creditor pool:
- In January 2025, FTX struck a settlement with K5 Global, aiming to claw back nearly $700 million from problematic investments. That infusion strengthens the bankruptcy estate and gives more to distribute.
- The court also greenlighted reductions in disputed claims, removing or adjusting about $1.9 billion in claims that lacked merit — freeing up additional capital for valid creditors.
- A controversial issue has been the valuation date: critics argue that using November 2022 prices penalizes those whose crypto appreciated over time. Bitcoin, for instance, surged well beyond its 2022 level.
- FTX has launched clawback lawsuits against parties who received funds before the collapse — including political donors, funds, and related entities. One such case targets over $38 million in political contributions. Another major suit in 2024 was filed against Binance and its ex‑CEO Changpeng Zhao, claiming $1.8 billion in misuse of customer funds.
All these efforts are essential — the more assets FTX recovers, the more can be paid to rightful creditors.
Fraud, Phishing & Ongoing Dangers
As payments roll out, malicious actors have jumped in. Phishing emails mimicking official communications are targeting former FTX users, claiming they’re eligible for payouts or must “click to claim” funds.
The Kroll team, managing the restructuring, has issued warnings: never give passwords, wallet keys or personal data via email. Some scams claim a “second distribution” is live or that refunds are ready for instant withdrawal — designed to steal credentials.
Rumors of new payout phases have also stirred volatility in the FTT token, showing how closely market sentiment ties into expectations of the bankruptcy timeline.
Key Figures & Criminal Outcomes
The FTX collapse remains one of the most notorious financial scandals in recent history. A few central names stand out:
- Sam Bankman-Fried: Sentenced in March 2024 to 25 years behind bars after a host of fraud, conspiracy, and fund misappropriation convictions. He was also ordered to repay more than $11 billion.
- Caroline Ellison, former head of Alameda Research, cooperated with prosecutors and got 2 years in prison in September 2024; her testimony was critical.
- Ryan Salame, ex-executive of FTX Digital Markets (Bahamas arm), was sentenced to 7.5 years for operating an unlicensed money service and breaking campaign finance rules.
Many current and former staff, partners, and affiliates remain under investigation or involved in litigation. Their fates will influence how far this saga continues to unfold.
Curious Facts & Notable Points
- Early on, FTX said it would return 118% of account values (based on November 2022) — in effect, a small “bonus” for account holders.
- Before the final plan approval, estimates suggested FTX could repay $11 billion, with recoverable assets possibly reaching between $14.5 and $16.3 billion.
- FTX claimed it couldn’t return original cryptocurrencies (like Bitcoin) because at the time of bankruptcy, it controlled less than 0.1% of the BTC customers believed they held.
- The internal systems were so dysfunctional that recovery teams had to rebuild accounting frameworks from scratch, labeling it one of the most chaotic corporate failures ever documented.
Despite the turmoil, millions of users cling to hope. This is one of the most closely watched and complex bankruptcy cases in the cryptocurrency era.
What’s Next for Creditors & the Crypto Market
Looking ahead, more payout rounds are expected beyond September 30, 2025, as final claim reviews and reconciliations play out.
Further settlements and clawbacks may yield additional funds for redistribution. The crypto community is watching closely — announcements of new distributions or recovery successes often drive speculation, especially in tokens tied to FTX’s ecosystem (like FTT).
Moreover, regulatory debates have been reignited. The FTX collapse underscores the need for transparency, oversight, and stronger safeguards for investor protection. For other exchanges and decentralized platforms, this case may become a cautionary blueprint for handling crises of liquidity or misuse of funds.