FTX Prepares Fifth Creditor Distribution Amidst Ongoing Recovery and Legal Scrutiny

FTX, the defunct cryptocurrency exchange, is set to initiate its fifth round of creditor distributions by the end of this month, with an estimated payout of approximately $900 million. This move marks another significant step in the extensive recovery efforts following the exchange’s dramatic collapse.

A Significant Milestone in Creditor Repayments

This upcoming distribution represents the fifth repayment action undertaken by the FTX bankruptcy management team as part of its comprehensive restructuring plan. Earlier in March this year, FTX disbursed $2.2 billion to creditors. Since the official commencement of repayment procedures in 2025, the FTX bankruptcy liquidation team has cumulatively allocated nearly $10 billion to creditors and other claimants, underscoring the scale of the ongoing recovery.

Who Benefits from This Round?

According to the official announcement, the latest compensation round will target creditors within FTX’s “Convenience Class” — predominantly retail and small-to-medium creditors who collectively represent an astonishing 99% of all claimants — alongside other creditors holding larger claims. Eligible creditors can expect to receive their payments via established platforms such as BitGo, Kraken, or Payoneer. Funds are anticipated to be credited to accounts within three business days from the distribution start date.

The FTX bankruptcy management team’s plan indicates that most retail creditors will receive compensation ranging from 118% to 142% of their account asset value at the time of FTX’s collapse in 2022.

The Payout Controversy: Cash vs. Crypto

Despite the seemingly generous payout percentages, the compensation scheme continues to draw criticism from a segment of creditors. The primary point of contention stems from FTX’s decision to distribute cash payments based on the asset valuation at the time of its bankruptcy filing in 2022, rather than offering “in-kind” repayment using the original cryptocurrencies held by users.

With major crypto assets like Bitcoin and Ethereum experiencing substantial price appreciation in recent years, many creditors argue that even a cash payout exceeding 100% of their 2022 valuation fails to adequately compensate for the significant opportunity cost of missed asset growth. Consequently, a considerable number of claimants are advocating for the return of their assets in cryptocurrency form.

Legal Ramifications Continue: Fenwick & West Settlement

Beyond the ongoing creditor payouts, the legal repercussions surrounding the FTX case continue to unfold. Fenwick & West, a prominent Silicon Valley law firm that served as FTX US’s primary external legal counsel, recently agreed to a $54 million settlement in May this year. The firm faced accusations of aiding and abetting the financial fraud perpetrated by FTX founder Sam Bankman-Fried (SBF) prior to the exchange’s implosion in 2022.

This latest distribution and the ongoing legal developments highlight the complex and multifaceted nature of the FTX recovery process, balancing creditor restitution with the pursuit of accountability.