- FTX’s $5B Second Distribution delivers up to 120% payouts, but most creditors still face losses due to 2022 valuation benchmarks.
- Despite progress in reimbursements, FTX creditors remain frustrated by outdated claim valuations set during the crypto market crash.
- The FTX payout wave may shake crypto markets as billions in recovered funds could be swapped or offloaded across retail exchanges.
FTX has officially launched its Second Distribution round, releasing over $5 billion to eligible claim holders. This includes those in both Convenience and Non-Convenience Classes who met the required pre-distribution steps. The payment process began on May 30, 2025. Consequently, qualified creditors can expect to receive funds within three business days via BitGo or Kraken. The distribution aligns with FTX’s Chapter 11 Plan of Reorganization.
The breakdown of payouts is as follows: Dotcom Customer Entitlement Claims (Class 5A) are receiving 72%. U.S. Customer Entitlement Claims (Class 5B) will receive 54%. General Unsecured and Digital Asset Loan Claims (Classes 6A and 6B) are both receiving 61%. Convenience Claims (Class 7) are getting a full 120%. These figures mark progress since the first payout in February 2025, which totaled $1.2 billion.
Recovery Milestones and KYC Requirements
John J. Ray III, Administrator of the FTX Recovery Trust, noted the effort as a major win for creditors. He emphasized ongoing efforts to secure additional assets and resolve lingering claims. Additionally, to participate in future distributions, claimants must complete several steps. These include logging into the FTX Customer Portal, completing KYC verification, submitting tax forms, and onboarding with either BitGo or Kraken.
FTX reminded users to beware of phishing scams posing as official communications. It also stressed that it never asks users to connect their personal wallets. Meanwhile, FTX Digital Markets Ltd. will handle separate communications for users under its jurisdiction.
Impact on Market Sentiment and Legal Backlash
Crypto investors are closely tracking these distributions. The sudden injection of liquidity may trigger asset sell-offs on retail exchanges. This could cause temporary market volatility. Moreover, the reimbursements have ignited controversy among affected users.
In September 2024, creditor Sunil Kavuri revealed court decisions pegged repayments to crypto’s 2022 crash-era prices. As a result, most creditors only recovered 10% to 25% of their holdings’ actual market value. Bitcoin, for instance, traded at around $16,000 when the claim was filed.
