In a fresh twist to the ongoing FTX bankruptcy saga, nearly 400,000 users risk forfeiting more than $2.5 billion in FTX repayments due to a failure to complete mandatory Know Your Customer (KYC) procedures, according to a new court filing.
The US Bankruptcy Court for the District of Delaware revealed in an FTX case update dated 2 April that roughly 392,000 FTX creditors have not taken the necessary steps to begin the KYC verification process. The original deadline of 3 March 2025 has now been extended, giving users until 1 June 2025 to comply or face permanent disqualification.
FTX Repayments: Billions on the Line in the FTX Bankruptcy Case
Under the terms of the FTX reorganisation plan, creditors who fail to initiate KYC by the new deadline will see their claims “disallowed and expunged in their entirety.” The court documents estimate that claims under $50,000 account for approximately $655 million, while larger claims exceed $1.9 billion — pushing the total value of jeopardised repayments past the $2.5 billion mark.
The next major FTX repayments round for creditors is scheduled for 30 May 2025, with over $11 billion in reimbursements on the table. According to the plan, 98% of FTX creditors are expected to receive a minimum of 118% of their initial claim value in cash — but only if they meet the verification requirements.
KYC Issues Plague FTX Users Ahead of FTX Repayments Deadline
Many FTX users have reported ongoing technical issues with the KYC process, leading to further frustration among already anxious creditors. According to Sunil, a member of the FTX Customer Ad-Hoc Committee, affected users can restart the verification process by emailing support@ftx.com to open a ticket. Once the support portal is accessed, users must create an account and re-upload their identification documents.
Sunil, who has remained an active voice for creditors throughout the FTX saga, confirmed in an X (formerly Twitter) post on 5 April that the system is once again accepting KYC submissions.
FTX Recovery Marks a Turning Point for the Industry
While the collapse of FTX and its 130+ subsidiaries in 2022 triggered one of the worst crypto winters to date — sending Bitcoin down to a low of around $16,000 — the start of repayments is being seen as a critical milestone in the industry’s recovery.
Alvin Kan, COO of Bitget Wallet, told Cointelegraph that although the FTX repayments may not immediately move the markets, they represent a maturing moment for the crypto ecosystem. “A significant portion of the funds could find their way back into crypto,” Kan said, hinting at renewed investor confidence.
FTX Digital Markets Already Paid Out $1.2 Billion
In February, FTX Digital Markets — the Bahamian arm of the exchange — processed its first round of repayments, distributing $1.2 billion to approved creditors. This early movement brought a glimmer of hope to thousands who had been caught up in the fallout of the FTX collapse.
As the 1 June deadline looms, the spotlight is now firmly on the nearly 400,000 FTX users who have yet to verify their identities. Without urgent action, they risk being written out of the FTX repayments, one of the largest crypto bankruptcy settlements in history.
Key Takeaway:
If you’re an FTX creditor and haven’t yet completed KYC, the clock is ticking. With over $2.5 billion at stake, missing the 1 June deadline could mean walking away with nothing. For the latest and freshest news and analysis from the crypto world, stay glued to The Bit Gazette.
