FTX reveals initial customer refund schedule

FTX creditors who had funds blocked after the exchange’s collapse in 2022 can now celebrate. This is because the exchange released a note stating that it plans to start refunds in 2024.

According to the note on the auditing company PwC’s website, there is still no exact date for the reimbursement to begin. But payments will likely start occurring by the end of 2024, at least in parts. Until then, exchange customers can start sending requests for refunds of their funds.

Before declaring bankruptcy, FTX blocked withdrawals of cryptocurrencies and fiat currency on its platform, leaving thousands of customers without access to their money. In this sense, the exchange’s recovery team estimates that there are a total of US$8 billion in total liabilities.

FTX bankruptcy and joint collaboration

According to a published note, the FTX bankruptcy estate has drawn up a potential timeline to begin repaying creditors by the end of 2024. This decision was made during the first meeting of the joint official liquidators of FTX Digital in the Bahamas.

It is worth noting that the FTX bankruptcy that began in 2022 consists of two peculiar processes. Firstly, there is the Chapter 11 bankruptcy that is currently being heard in a Delaware Court in the United States.

Then there is the official liquidation process for FTX Digital, a Bahamas-based subsidiary of FTX Global.

This differentiation was necessary to accommodate the “hopelessly mixed” nature of FTX’s accounting. In other words, the fact that the accounts of FTX and its clients did not have any segregation.

Fortunately, both parties are committed to working together and refunding all customers. As FTX chose not to resume its activities, the team’s focus is on publishing the refund plan.

Therefore, any creditor of FTX can easily present their complaint to either entity. The refund of amounts must occur in parts, following criteria that have yet to be established.

FTX Creditors Submit Refund Requests

To be able to receive a refund, customers need to carry out an identity verification process, the famous KYC, and then present their claims. Anyone who has already done KYC on their FTX account will not need to go through the process again.

Last week, FTX indicated that the US government’s claims for unpaid taxes alone could total between $3 billion and $5 billion. The exchange is still in negotiations with authorities to ensure a simplified asset distribution process.

Ramnik Arora, former head of product at FTX Derivatives Exchange, revealed that he acquired $61 million worth of FTX claims through his new startup called FTX Creditors. This activity consists of purchasing these rights at discounted prices, usually from customers who cannot (or do not want) to wait for a full refund.

FTX creditors have until May 15th to decide whether they want to be part of the repayment process which is now set for the end of 2024. However, there is the possibility of it being extended until June 2025.