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Crypto Trends

FTX to Dispense $1.6 Billion in Bankruptcy Repayments This Month

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In brief

  • The FTX Recovery Trust has announced its third distribution to former clients of the bankrupt exchange.
  • A total of $1.6 billion will be repaid to creditors this time.
  • The FTX brand went bankrupt in 2022 after it was criminally mismanaged.

Creditors of collapsed crypto exchange FTX will receive $1.6 billion at the end of this month in a third distribution to make clients whole, the FTX Recovery Trust announced on Friday. 

Four groups of creditors will receive the funds on September 30, with distributions ranging between 78% and 120% of the value of their FTX holdings when the exchange collapsed in November 2022, according to a press release from the Trust, which is overseeing assets and claims from the exchange’s bankruptcy estate. 

The distributions mark the third phase of the FTX estate’s recovery plan, and will be paid via crypto exchanges Bitgo and Kraken, and payments platform Payoneer.



The FTX Recovery Trust first announced it would execute its distribution plan last year. 

FTX allowed customers to buy, sell, and bet on the future price of major digital coins and tokens.

But FTX’s eccentric CEO, Bankman-Fried, criminally mismanaged the exchange with top associates, mainly by using customer cash to cover risky bets made by the company’s sibling hedge fund, Alameda research.

This eventually caused the company’s 2022 bankruptcy and billions of dollars in investor cash to disappear.  

John J. Ray III, the highly-experienced lawyer tasked with recovering FTX customers’ missing investments, said FTX’s collapse surpassed the high-profile bankruptcy of energy company Enron in the early 2000s. 

Bankman-Fried was arrested, charged and later jailed for defrauding customers.  

Key members of Bankman-Fried’s inner circle testified against him during the trial. FTX co-founder Gary Wang, former Alameda CEO Caroline Ellison, and FTX’s former head of engineering Nishad Singh, all said they committed crimes at Bankman-Fried’s behest.

“Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history, a multi-million scheme designed to make him the king of crypto,” said Damian Williams, U.S. attorney for the Southern District of New York in remarks following the verdict.

Bankman-Fried is now serving a 25-year jail sentence in a Southern California prison for fraud and other crimes. 

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Ftx To Distribute 1.6B To Creditors By End Of September
Crypto Trends

FTX to Distribute $1.6B to Creditors by End of September

by admin



FTX announced it will commence its third distribution to creditors on September 30, 2025, releasing approximately $1.6 billion. The move is the next step in the company’s Chapter 11 Plan of Reorganization, returning funds to customers and creditors affected by the exchange’s collapse.

(1/3) FTX today announced it is set to distribute approximately $1.6 billion in its Third Distribution to holders of allowed claims in the Plan’s Convenience and Non-Convenience Classes that have completed the pre-distribution requirements on September 30, 2025.

— FTX (@FTX_Official) September 19, 2025

The official statement says that creditors who are qualified and have met all the requirements, such as Know Your Customer (KYC) verification and onboarding with a designated service provider, should get their money within one to three business days of the distribution date. BitGo, Kraken, or Payoneer will be used to handle the funds.

Distribution Breakdown

The distribution percentages vary by creditor class, with some groups nearing a full recovery of their funds. Following this third payout, holders of Dotcom Customer Entitlement Claims (Class 5A) will have received a cumulative total of 78% of their allowed claim amount.

In a notable development, U.S. Customer Entitlement Claims (Class 5B) will reach a 95% cumulative distribution. Meanwhile, General Unsecured Claims and Digital Asset Loan Claims (Classes 6A and 6B) will both reach an 85% total recovery. Convenience Claims (Class 7) are set for a 120% distribution, as detailed in the FTX claims portal. This structured payout is part of the ongoing legal process managed through the U.S. Bankruptcy Court.

Also read: Binance Co-Founder CZ Seeks Dismissal of $1.76B FTX Claim





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Former FTX Legal Advisors Move to Dismiss Lawsuit, Claiming No Knowledge of Fraud

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In brief

  • Fenwick & West moves to dismiss lawsuit alleging the law firm aided FTX’s multi-billion dollar fraud, arguing it had no knowledge of wrongdoing.
  • Firm claims it only provided “routine and lawful legal services” despite bankruptcy examiner finding “exceptionally close relationships” with FTX leadership.
  • Lawyers argue plaintiffs are recycling allegations from a dismissed case against another FTX advisor, Sullivan & Cromwell, without proving fraud knowledge.

Former FTX legal advisors, Fenwick & West have moved to dismiss a lawsuit that alleges the firm played a key role in the mutli-billion dollar collapse of the exchange.

The firm wrote that after two years of litigation, the plaintiffs have yet to prove that Fenwick & West knew its client was committing fraud.

The lawsuit, filed in 2023, names many defendants who investors allege had knowledge of FTX’s fraud. It includes crypto exchange Binance, the Federal Deposit Insurance Corporation, super model Gisele Bundchen and her ex-husband and NFL star Tom Brady, the NBA’s Golden State Warriors, venture capital investor Kevin O’Leary, and tennis star Naomi Osaka.

Fenwick is adamant that it be left out of the fray. The firm did not immediately respond to a request for comment from Decrypt.

“Plaintiffs’ core theory is as facile as it is flawed,” the firm wrote. “Fenwick is not liable for aiding and abetting a fraud it knew nothing about, based solely on allegations that Fenwick did what law firms do every day—provide routine and lawful legal services to their clients.”

FTX went bust in 2022 after it became clear that the crypto exchange was using client funds, its own FTT exchange token, and Robinhood shares to prop up its sister firm, Alameda Research.

The past couple years have seen FTX founder and former CEO Sam Bankman-Fried sentenced to 25 years in prison, former Alameda Research CEO Caroline Ellison get a more lenient 2-year sentence as part of a plea deal, and billions repaid to the company’s creditors.

An independent FTX bankruptcy examiner reviewed hundreds of thousands of internal FTX documents, ultimately finding that Fenwick & West had “exceptionally close relationships” with FTX leadership and became “deeply intertwined” in the firm’s actions.

But the firm argued in its latest motion that the plaintiffs, a group of FTX investors, are making allegations “parroted from a report” on Sullivan & Cromwell, another law firm that advised FTX.

“But what Plaintiffs do not explain is that their allegations against Fenwick mirror those that they had earlier pursued quite aggressively against Sullivan & Cromwell, but then precipitously dismissed with prejudice,” Fenwick wrote.

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