TLDR
- Nearly 400,000 FTX creditors risk losing $2.5 billion in repayments for failing to complete KYC verification
- Original March 3 deadline has been extended to June 1, 2025
- Claims under $50,000 could account for $655 million in disallowed repayments, while claims over $50,000 could amount to $1.9 billion
- The next round of FTX creditor repayments is set for May 30, 2025, with over $11 billion expected to be repaid
- Under FTX’s recovery plan, 98% of creditors are expected to receive at least 118% of their original claim value in cash
Nearly 400,000 FTX users risk losing $2.5 billion in cryptocurrency repayments because they failed to complete required Know Your Customer (KYC) verification. According to an April 2 court filing in the US Bankruptcy Court for the District of Delaware, approximately 392,000 FTX creditors have not started or completed the mandatory verification process.
The cryptocurrency exchange initially set a March 3, 2025 deadline for users to begin the verification process. However, this deadline has now been extended to June 1, 2025, giving users extra time to verify their identity and maintain claim eligibility.
FTX’s legal team stated in the filing that claims from users who fail to meet the new deadline may be permanently disqualified. The court documents reveal the scale of potential losses is larger than previously estimated.
Breaking Down the Numbers
The potential disqualified repayments break down into two main categories. Claims under $50,000 could account for roughly $655 million in disallowed repayments. Claims over $50,000 could amount to $1.9 billion.
These figures combine for a total of more than $2.5 billion at risk. This is part of a broader $3.36 billion in projected disallowed claims disclosed by FTX in its disputed claims reserve breakdown.
Many FTX users have reported difficulties with the KYC process. Users who were unable to submit their documentation can restart the verification process, according to an April 5 post from Sunil, an FTX creditor and Customer Ad-Hoc Committee member.
Affected users should email FTX support to receive a ticket number. They can then log into the support portal, create an account, and re-upload the necessary KYC documents.
Repayment Plans Moving Forward
Despite these challenges, the exchange’s recovery efforts continue to move forward. The next round of FTX creditor repayments is scheduled for May 30, 2025. Over $11 billion is expected to be repaid to creditors with claims exceeding $50,000.
FTX has gathered $11.4 billion for distributions. The exchange is offering full cash recoveries based on asset values at the time of its November 2022 collapse.
Under FTX’s recovery plan, 98% of creditors are expected to receive at least 118% of their original claim value in cash. This represents a better outcome than many initially expected when the exchange collapsed.
FTX’s Bahamian subsidiary, FTX Digital Markets, already processed the first round of repayments in February. This initial distribution provided $1.2 billion to creditors.
The bankruptcy process remains complex. FTX’s legal team reported receiving “27 quintillion” total claim submissions, many of them fraudulent or inflated. This has added to the challenges in sorting legitimate claims.
The crypto industry continues to recover from the collapse of FTX and more than 130 subsidiaries. This event launched a series of insolvencies that led to what many call the industry’s longest crypto winter. During this period, Bitcoin’s price bottomed out at around $16,000.
According to Alvin Kan, chief operating officer at Bitget Wallet, the beginning of the FTX repayments is a positive sign for the maturation of the crypto industry. He told Cointelegraph that a large portion of these repayments may be reinvested into cryptocurrencies.
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