Author: CryptoSlate

Translated by: Deep Tide TechFlow

Deep Tide Guide: The fifth round of FTX bankruptcy distribution will start on July 31, but only creditors who have passed the review by June 16 and completed onboarding with BitGo, Kraken, or Payoneer can receive the funds. More troublesome is that creditors from 45 countries are still unable to choose any distribution service provider, and if onboarding is not completed within the six-month window, the right to claim may be completely lost.

FTX has prepared about $900 million in compensation payments for July 31, but only creditors who have passed the June 16 review and completed onboarding with the service providers can receive it.

FTX announced that creditors holding approved claims in categories 5A, 5B, 6A, 6B, and 7 who meet the above conditions should receive their payments within 1 to 3 business days via BitGo, Kraken, or Payoneer starting July 31.

According to the FTX distribution dashboard FAQ, claims must be approved, and the original holder must complete KYC before the record date of June 16. Valid tax forms, successful completion of onboarding with service providers, and sanction screening must also be completed before that date.

Who is still locked out

As of the time of writing, FTX's service provider eligibility page still shows the list from May 22, listing residents from 45 jurisdictions who cannot choose distribution service providers: Afghanistan, Algeria, Bangladesh, Belarus, Burundi, Cambodia, Cameroon, Central African Republic, Chad, China, Colombia, Democratic Republic of the Congo, Republic of the Congo, Cuba, Egypt, Equatorial Guinea, Ethiopia, Fiji, Gabon, Guernsey, Honduras, Iran, Iraq, Kuwait, Lebanon, Lesotho, Libya, Macau, Malawi, Maldives, Moldova, Morocco, Myanmar, Nepal, North Korea, Qatar, Russia, Rwanda, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, Ukraine, and Western Sahara.

FTX states that the coverage of service providers may change and could add more options, so this list is a snapshot of the situation and not a permanent ban. Currently, when no available service provider can service a jurisdiction, FTX delays the distribution.

Affected creditors must wait for coverage, monitor updates through the FTX client portal and email, then successfully complete onboarding to receive payments. Even if the portal shows options based on residence, the service provider still has the final decision on onboarding.

Subsequent coverage cannot restore the July 31 payment for those who failed to complete onboarding by the deadline of June 16. However, it may open a pathway to receive subsequent distributions, provided that successful onboarding is completed and meets the program deadlines.

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Creditors who have access to service providers still face significant choices. Distribution payments cannot be split among multiple service providers, and choices are irrevocable. By onboarding, creditors irrevocably relinquish the right to receive cash directly from FTX and instruct FTX to pay the selected service provider. Questions regarding funds in that service provider’s account then turn to the service provider's support team.

The FTX dashboard FAQ also states that creditors holding approved claims who fail to successfully complete onboarding within six months starting from July 31 may lose the right to claim distribution. Missing the June 16 deadline prevents payments for this round; failing to complete onboarding within a longer timeframe incurs separate loss risks.

Why distributions exceed 100%

The cumulative distribution ratios announced by FTX—105% for categories 5A and 5B, 103% for categories 6A and 6B, and 120% for category 7—are not yields relative to current cryptocurrency prices. They are the percentages of approved plan claims.

FTX's claims framework uses a court-approved conversion table to calculate the value of digital asset claims, so this percentage describes the recovery rate relative to the approved claim amount, rather than the current market value of the assets.