Key Takeaways
- The court document states that approximately 392,000 claimants had not initiated the mandatory KYC process
- Under the terms of the court-approved plan, claims from creditors who did not start the verification process by that date would be “disallowed and expunged in entirety.”
Close to 400,000 creditors of the bankrupt crypto exchange FTX could lose a combined $2.5 billion in repayment claims if they fail to meet the extended Know Your Customer (KYC) verification deadline, according to court filings submitted on April 2 to the U.S. Bankruptcy Court for the District of Delaware.
The court document states that approximately 392,000 claimants had not initiated the mandatory KYC process as of the original March 3, 2025 deadline. Under the terms of the court-approved plan, claims from creditors who did not start the verification process by that date would be “disallowed and expunged in [their] entirety.”
Following reports of processing difficulties and user complaints, the deadline has been extended to June 1, 2025, at 4:00 p.m. ET. Creditors who do not meet this new deadline will permanently lose the right to collect repayments, regardless of claim size.
The affected claims are significant in value. Claims under $50,000 total approximately $655 million, while those exceeding $50,000 add up to around $1.9 billion, bringing the total value of potentially disqualified claims to over $2.5 billion.
FTX, which filed for bankruptcy in November 2022, is currently executing a court-supervised recovery plan. The next major distribution round is scheduled for May 30, 2025, with over $11 billion expected to be repaid to verified creditors. Under the plan, about 98% of claimants are projected to receive at least 118% of the value of their original claims, calculated as of the petition date.
The KYC requirement has drawn criticism from some users, with complaints ranging from technical glitches to a lack of communication from the exchange. According to an update posted on April 5 by FTX creditor and Customer Ad-Hoc Committee member Sunil Kavuri, users facing verification issues can restart the process by contacting FTX support and re-uploading their documents via the claims portal.
A court order accompanying the latest filing notes that even claims not currently listed in the disallowed category could still be rejected if full KYC information is not submitted by the June 1 deadline. “Claims listed on Schedule 1 to the Order but not included on Exhibit A attached hereto may still be subject to disallowance,” it states.
In February, FTX Digital Markets — the Bahamian subsidiary of the exchange — processed its first round of distributions, releasing $1.2 billion to creditors. More payments are expected in the coming months.
Meanwhile, creditors in over 160 jurisdictions including Nigeria, Egypt, Russia, China, Colombia, Ukraine, and Saudi Arabia remain excluded from the initial repayment phase. In an earlier update, Kavuri confirmed that FTX is working on a solution for users in these regions, although no specific timeline has been provided.
The availability of distribution partners such as Kraken and BitGo remains a limiting factor, as these services are not accessible in many of the affected countries. On April 1, Backpack, the company that acquired FTX Europe, opened its own claims portal, potentially facilitating payouts to European creditors
