Officials say people will receive payouts within 1 to 3 days after March 31 via BitGo, Kraken, or Payoneer, as long as they sign up, verify their identity, and complete the required tax forms. The development comes as prosecutors push back against FTX co-founder Sam Bankman-Fried’s bid for a new trial, arguing that he has failed to demonstrate any unfairness in his conviction. In a recent court filing submitted in February, Bankman-Fried argued that newly identified witnesses could challenge the prosecution’s claim that he defrauded FTX customers.

FTX raises payout to creditors

FTX designed a payout system that groups creditors into classes representing different types of claims, such as customer funds, loans, or smaller claims, for compensation. Because the case involves people from different nations with varying losses, the entity will assess the type of claim and the amount owed to avoid confusion and treat all creditors consistently under the same rules.

Furthermore, international users under Class 5A will receive an extra 18%, bringing their total recovery to about 96% and giving them hope that full repayment is well within reach after waiting for too long. Meanwhile, US users in Class 5B will receive an extra 5%, bringing their total recovery to 100%, offering hope to other users waiting to reach the same level.

Similarly, creditors under Classes 6A and 6B, mainly non-customer claims such as general unsecured claims and digital asset loan claims, will receive an additional 15%, bringing their recovery to 100%. For smaller claims under Class 7, creditors will receive more than they lost (up to 120%), a move never seen before in most bankruptcy cases. So far, FTX has returned more than $6 billion to creditors, including the $2.2 billion scheduled for March, about $1.2 billion in early 2025, another $5 billion around May 2025, and a $1.6 billion payout in September 2025.

Back in 2022, when FTX collapsed, there was a lot of uncertainty in the industry about fund recovery, but the situation is starting to change, with more payouts and higher recovery rates. Therefore, the latest $2.2 billion distribution indicates that full recovery is imminent after a long and hopeless wait. In the upcoming payout starting March 31, eligible users will receive their funds within 1 to 3 business days, but they must first log in to the FTX customer Portal, complete identity checks (Know Your Customer, or KYC), and then submit tax forms.

After that, users must onboard with one of the approved distribution providers, including BitGo, Kraken, or Payoneer, based on factors such as location, payment options, and personal preference, as they cannot change their choice. Users give up their right to receive direct payments from FTX once they choose a provider, so they must accept the conditions before completing the onboarding process, as it is irreversible.

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In a post on X, SBF reminded the public about Dan Chapsky’s memo. He mentioned that Chapsky was more than qualified to assess the company’s financial position. However, Chapsky was hired by bankruptcy lawyers to calculate whether the exchange was solvent.

SBF sticks to FTX solvency claims

In the post, SBF mentioned that Chapsky’s declaration mentions that FTX’s international arm faced an $8 billion liquidity shortfall on Nov. 11, 2022. Despite this, the platform remained solvent because its assets exceeded customer deposits. He added his opinion on the nature and value of the assets in FTX’s possession on November 11.

The declaration also added that international customers could have been repaid within months, not years, if the exchange had not been forced into omnibus bankruptcy proceedings and abruptly shut down. SBF added that this view was validated by findings from the bankruptcy court’s independent examiner. Earlier, SBF had claimed that fresh evidence shows that Biden’s DOJ threatened several witnesses into silence or led them to change their testimony.

He asked for his conviction to be thrown out, adding that Judge Lewis Kaplan should recuse himself from this motion. He stated that companies were forced offshore under Biden, while under the Trump administration, they’re welcome back in America. He pointed out that under Democrats, companies that needed licenses were refused. Meanwhile, under the new administration, that has changed, and the DOJ is no longer indicting entire industries.

New evidence and self-representation on the cards

SBF is presently serving a 25-year prison sentence for fraud tied to FTX’s collapse, and now he is seeking a new trial. In this case, he also filed a motion in Manhattan federal court Pro Se. This suggests that he is representing himself. The request for a new trial was filed by his mother, Barbara Fried. She had argued that new witness testimony could undermine the prosecution’s case.

The filing highlighted the absence of testimony from former FTX executive Ryan Salame. He fought his own legal battle and was later convicted on federal charges. Salame had claimed he reached an agreement to cooperate with prosecutors that would shield his wife. But she was later charged with allegedly taking illegal campaign contributions in her congressional campaign.

SBF’s new bid argues that new evidence and witness accounts could challenge the narrative presented at trial. However, appellate judges have previously shown skepticism about that line of argument. The November hearing saw members of the appeals panel question whether solvency was central to the case. FTX’s fallen token FTT posted some gains amid the fresh claims. FTT is trading at $0.373, up by more than 13%.

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Trump made this known in an interview with The New York Times on Thursday. The president also ruled out pardons for music producer Sean Combs and former New Jersey Senator Robert Menendez. Bankman-Fried, often called by his initials SBF, has been locked up since August 2023 after a federal judge took away his bail ahead of his criminal trial.

Donald Trump will not issue a pardon to SBF

During the same conversation, Trump responded to questions about possible conflicts of interest involving the cryptocurrency business. The president and members of his family have ties to American Bitcoin, a company that mines Bitcoin, and World Liberty Financial, which runs the USD1 stablecoin. Trump also has his own digital token called Official Trump, currently trading at $5.36. “I got a lot of votes because I backed crypto, and I got to like it,” Trump said.

A judge handed Bankman-Fried his 25-year prison term in March 2024 after a jury found him guilty on seven felony charges. Those charges related to how customer money was mishandled at FTX. Two other former executives got shorter sentences after they made deals with prosecutors. Caroline Ellison, who ran Alameda Research, and Ryan Salame, who was co-CEO of FTX Digital Markets, both received less time.

Some reports indicated that Bankman-Fried might have tried to get a pardon from Trump by claiming he had a “good relationship” with Republicans and getting close to conservative personalities like Tucker Carlson. On Polymarket, people betting on whether Trump would pardon SBF before 2027 only put the odds at 6%. Meanwhile, Trump has given pardons to other people connected to the crypto world.

In January, soon after he started his term, he pardoned Ross Ulbricht, who founded the Silk Road marketplace. Trump also surprised many in October by pardoning Changpeng Zhao, known as CZ, who used to run Binance and served four months in prison. Trump later said he did not know Zhao. Even though a pardon from Trump is off the table, Bankman-Fried still has ways to challenge his conviction and sentence through the courts.

In November, the US Court of Appeals for the Second Circuit listened to arguments from SBF’s lawyers who want to overturn the former CEO’s conviction. As of Thursday, the court had not posted any decision to the public record, but a ruling is expected at some point. If the appeals court says no, Bankman-Fried could take one final shot by asking the Supreme Court to review his case.

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Bankman-Fried is currently serving time in a federal prison in Mendota, serving his 25-year sentence for his part in the collapse of the crypto firm. His sentence has become a case where political inclinations are in the works, and now with a pardon, it is moving towards the sentimental angle. Before FTX collapsed, SBF was on a high horse, building the exchange from 2019, and in two years, the company’s valuation had climbed to $32 billion.

Sam Bankman-Fried and the hope of a presidential pardon

FTX’s collapse came as fast as its rise, leaving customers to trigger a liquidity crisis through withdrawals on that fateful day in 2022. Within days, the company filed for Chapter 11 Bankruptcy, leaving SBF running helter-skelter. A while later, SBF was arrested in the Bahamas and extradited to the United States upon request, leading to a very long legal proceeding where a lot of secrets were revealed.

According to reports, running a crypto exchange wasn’t his only forte, as he ran with the high and mighty on the political scene. He made several political donations, making more than $70 million in donations over 18 months. More than half of that, $40 million, went to Democrats, coming only second to George Soros. He also didn’t forget the Republicans, using dark money to make donations to avoid scrutiny, according to several sources.

Jail time and public reactions to the pardon

After his sentencing, SBF was sent to the Mendota federal prison in California. The facility provides medium and minimum housing, with enough security to keep prisoners safe. His lawyers are still on the road to an appeal, noting a discretion in the trial that violated his rights. Although appeals rarely succeed, SBF will be counting on having some years removed from his sentence.

However, not everyone is sold on a potential redemption arc for SBF. The general public, especially those who lost funds in FTX’s collapse see SBF as the bad man. The official charged with cleaning up SBF’s mess, John Ray, has repeatedly talked about the level of his action’s harm. Meanwhile, a recent survey shows that only 37% of the country’s population see him in a favorable light, with the others constituting people who do not care or are unaware.

However, 73% of those who followed his proceedings feel he should be behind bars. If Biden grants SBF a presidential pardon, critics would be angry, and a backlash would be inevitable. While most people might see it as a move to repay his efforts to the Democrats, the White House won’t be moved, seeing as persons are things that occur every time, usually with political ties.

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Prosecutors’ Statements and Legal Proceedings

U.S. Attorney Damian Williams stated that Salame advanced FTX and Alameda Research’s interests through unlawful political campaigns and unlicensed financial activities. These actions were said to have contributed to FTX’s growth by circumventing legal requirements. Salame reported fraudulent activities to the Securities Commission of the Bahamas on November 9, 2022, two days before Sam Bankman-Fried resigned and FTX declared bankruptcy. Following this, Bankman-Fried was extradited to the U.S. and faced conviction on seven felony counts, leading to a 25-year prison sentence in March.

Prosecutors recommended Salame serve up to seven years for his role in misusing FTX user funds and campaign finance fraud. However, his defense argued for an 18-month sentence, suggesting he played a minor role in the conspiracies and posed a low risk of reoffending.

Previous FTX Executives’ Legal Status

Salame is the second prominent figure from FTX and Alameda Research to be sentenced, following Bankman-Fried. Other executives, including former Alameda CEO Caroline Ellison, former FTX engineering director Nishad Singh, and FTX co-founder Gary Wang, have pleaded guilty and testified during Bankman-Fried’s trial. The dates for their sentencing were not established at the time of this report.

As part of his plea agreement, Salame must pay approximately $12 million in penalties, divided between the U.S. government and FTX debtors. He is also required to surrender two properties and a business. His legal team indicated that he would be left with no remaining assets post-forfeiture, despite having a net worth in the millions in 2022. A court filing on May 27 revealed that Salame might retain ownership of a 2021 Porsche due to insufficient equity for forfeiture.

Political Donations and Campaign Finance Fraud

Salame admitted to acting as a straw donor, facilitating over $100 million in political donations to help FTX gain political favor. These contributions were made to candidates from both major parties, funded by transfers from an Alameda subsidiary, and were categorized as loans, which Salame did not intend to repay. Prosecutors described this as one of the largest campaign finance violations in U.S. history, involving more than 300 individual donations. Salame met with senior politicians, including Senator Mitch McConnell and Congressman Kevin McCarthy, as part of these activities.

The post Former FTX Executive Ryan Salame Sentenced to 7.5 Years in Prison first appeared on Coinfea.

The trial began this week and has been marked by intense discussions over the relevance of certain evidence. One of the key points of contention is the DOJ’s assertion that even if there isn’t a specific law governing cryptocurrencies, the fundamental principle of not misappropriating customer assets remains intact. This perspective challenges the defense’s argument that the regulatory gray area surrounding crypto exchanges should be considered.

Bankman-Fried’s defense has also pointed to the reallocation of customer funds as a then-industry standard. However, the prosecution counters this by emphasizing that such practices would only be defensible if Bankman-Fried genuinely believed they were legally acceptable. This ongoing trial underscores the broader friction between the burgeoning crypto sector and traditional regulatory authorities. It’s a tension that’s been echoed by other industry giants like Ripple, Binance, and Coinbase, all of whom have been vocal about the need for clearer crypto-specific regulations.

Another intriguing aspect of the case is the spotlight on Bankman-Fried’s philanthropic activities. The DOJ acknowledges these charitable endeavors but insists that they be scrutinized to ensure they aren’t merely PR moves to bolster his reputation.

A subplot to the main allegations is the issue of Bankman-Fried’s supposed indirect political contributions. While the government isn’t labeling these donations as illegal per se, they are keen to highlight the potential inconsistency between Bankman-Fried’s assurances to his customers and the actual use of their funds. It’s worth noting that initial claims about these political donations were excluded due to their absence from the original extradition agreement from the Bahamas, where Bankman-Fried was detained last December.

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Facing multiple charges, including fraud and money laundering, Bankman-Fried could be looking at a lengthy prison sentence if found guilty. This makes the debate over jury selection a critical aspect of an already high-stakes trial.

In a correspondence to Judge Lewis Kaplan, Williams criticized the defense’s questions as “irrelevant,” “protracted,” and occasionally “biased.” He particularly took issue with questions concerning Attention Deficit Hyperactivity Disorder (ADHD) and effective altruism. Bankman-Fried is known to have ADHD, but Williams dismissed questions about the condition as “irrelevant and skewed.” He also accused the defense of manipulating the narrative through questions about effective altruism.

Interestingly, both the prosecution and the defense concur on the importance of probing potential jurors’ opinions on cryptocurrency. This mutual agreement highlights the role that views on digital currency could play in a case tied to the downfall of a Bitcoin trading platform. Bankman-Fried has denied all allegations, and his trial is scheduled to commence on October 3rd in New York City.

Williams also emphasized that the government’s questions are “conventional, impartial, and fitting,” thereby spotlighting that the disagreement over jury selection is not merely procedural but also involves potential biases that could sway the trial’s verdict.

Furthermore, Williams criticized the defense’s questions about political donations, labeling them irrelevant and consistent with his view that the defense’s questions are either misguided or biased.

The contrasting strategies in jury selection reveal the divergent tactics each side is employing. While prosecutors aim for an unbiased jury, the defense is crafting a narrative that could tip the balance in their favor.

The forthcoming trial is set to be a landmark case, shedding light on how factors like cryptocurrency, personal conditions such as ADHD, and even philosophical ideologies could influence contemporary legal proceedings.

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Moreover, last October, Salame reportedly agreed to cooperate with authorities. He might even testify against SBF, adding another twist to this intricate case. However, it’s crucial to underline that Salame still needs to be prosecuted regarding the FTX bankruptcy. If he takes this rumored path, he’d be the fourth ex-FTX executive to enter a guilty plea. The list of those who’ve already pleaded guilty is noteworthy. It includes Gary Wang, Caroline Ellison, and Nishad Singh, all pivotal figures in the U.S. government’s case against SBF.

Documents from a Bahamian court, dated December 14, shed more light on the matter. Salame claimed that FTX Digital Markets transferred customer funds to its affiliate, Alameda Research, on November 9. The stated reason was covering Alameda’s financial setbacks. However, Salame confessed that this transfer lacked customer consent. Consequently, this move’s legality is now under the microscope.

The FBI searched Ryan Salame in April, signaling a heightened probe into the issue. Additionally, Manhattan-based federal prosecutors examined Salame’s actions in July. Their focus? Alleged violations of campaign finance regulations, which carry significant legal implications.

This evolving situation adds another layer to the FTX case. Salame’s potential confession complicates an already multifaceted legal scenario. As the case unfolds, the outcome of his talks with prosecutors remains a mystery. Hence, many keenly observe its potential ripple effects on the broader FTX narrative.

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