FTX creditors set to receive $1.6B in third payout on Sept. 30

On Friday, September 20, the FTX Recovery Trust announced that FTX’s creditors will receive $1.6 billion, a third round of payments, intended to compensate clients on September 30. FTX, once a leading cryptocurrency exchange founded by Sam Bankman-Fried, imploded in November 2022 amid revelations of multi-billion-dollar fraud. Concerning the third round of payment mode, creditors in groups of four will secure their share of the funds at the end of this month, with a distribution rate ranging from 78% to 120%. According to a press release from the Trust, which manages the assets and claims linked to FTX’s bankruptcy, this distribution rate is the percentage of their FTX holdings worth when the cryptocurrency exchange collapsed. Additionally, it marks the third phase of FTX’s recovery plan, which will take place via the crypto exchanges Bitgo and Kraken, along with Payoneer, a financial services company. This is not the first time the FTX Recovery Trust has made the distribution plan public. In 2024, the legal entity had initially shared it. FTX collapse was due to mismanagement of funds Under FTX’s operation, its users were allowed to purchase, sell, and make speculations about the future prices of widely adopted cryptocurrencies and tokens. This greatly attracted customers and increased the exchange’s user base . However, its CEO, Bankman-Fried, alongside his senior partners, used customers’ funds invested in the exchange to cover high-risk investments that Alameda Research, a hedge fund connected to the company, made without their consent. Consequently, this mismanagement of customers’ funds resulted in FTX’s bankruptcy, with billions of investor funds missing. To track down the missing funds, John J. Ray III, an American attorney and CEO specializing in recovering funds from failed corporations, was assigned to get them back. While working on this, the American attorney pointed out that the exchange’s bankruptcy was greater than that of Enron, an energy firm, in the early 2000s. FTX’s CEO was arrested with fraud charges Following his actions, Sam Bankman-Fried was arrested and later charged with defrauding clients. When the charges were presented in court, he was legally jailed. This was made possible because prominent figures from Bankman-Fried’s close team decided to testify against him during the trial. Interestingly, FTX co-founder Gary Wang, former Alameda CEO Caroline Ellison, and Nishad Singh, who used to lead engineering at FTX, acknowledged that they committed crimes because Bankman-Fried had commanded them to do so. After the verdict was announced, a Lawyer and former United States Attorney for the Southern District of New York weighed in on the situation. He commented that Sam Bankman-Fried’s financial fraud was one of the largest in the history of America. According to him, the CEO carried out this multi-million dollar scheme to position himself as the ruler of crypto. Meanwhile, to serve as a warning to any individual with intentions similar to those of Bankman-Fried, the relevant authorities sentenced the CEO to serve 25 years in prison in Southern California for fraud and other offenses. On related developments, Bankman-Fried’s dormant X account suddenly became active this week, mass-following other profiles after months of silence. The unexpected activity sparked speculation and fueled a rally in the FTT token, which briefly climbed above $1. As earlier reported by Cryptopolitan , the renewed activity raised questions about whether the former FTX founder, currently serving time in prison, somehow signals continued interest in crypto, or even hints at an early release. However, there has been no official word regarding his release, and the FTX bankruptcy process is still moving forward, with the next creditor distribution scheduled for September 30. On-chain data suggests Bankman-Fried has little to no funds left for trading, with one of his meme wallets now holding just 0.67 SOL. Meanwhile, wallets associated with Alameda Research continue to receive allocations of SOL from earlier distributions, but those funds are being directed toward bankruptcy settlements rather than trading. KEY Difference Wire : the secret tool crypto projects use to get guaranteed media coverage