FTX Creditors Risk Losing $2.5 Billion Due to Missed KYC Deadline
Thousands of creditors linked to the failed cryptocurrency exchange FTX might lose out on a massive $2.5 billion repayment due to incomplete Know Your Customer (KYC) verification.
Court documents submitted on April 2 to the US Bankruptcy Court in Delaware reveal that nearly 400,000 creditors have yet to initiate the mandatory KYC process, despite the initial deadline having passed.
Originally, FTX users had until March 3 to begin verifying their identities, but those who failed to do so risk having their claims dismissed entirely. To give creditors another chance, the court has now extended the deadline to June 1, 2025. Missing this new cut-off could mean that their claims are permanently invalidated, effectively cutting them off from receiving any funds.
The court estimates that smaller claims under $50,000 could account for around $655 million of the total at-risk amount, while claims exceeding $50,000 could add up to $1.9 billion. Combined, this puts more than $2.5 billion in repayments at stake. The next round of payouts is expected on May 30, with over $11 billion slated for creditors whose claims are above $50,000. According to FTX’s recovery strategy, about 98% of creditors are projected to receive at least 118% of their initial claim amount in cash.
Some users have encountered issues while attempting to complete the KYC process. Sunil, an FTX creditor and member of the Customer Ad-Hoc Committee, advised those affected to restart their verification by contacting FTX support. They will need to obtain a ticket number, log into the support portal, and re-upload their documents to complete the process.
In February, FTX Digital Markets, the Bahamian subsidiary of FTX, began repaying creditors, distributing around $1.2 billion. The collapse of FTX, along with more than 130 affiliated companies, marked a significant event in the crypto sector, triggering one of the harshest market downturns in recent history. Bitcoin, in particular, plummeted to approximately $16,000 during the fallout, reflecting the broader impact of the exchange’s collapse.
As the situation develops, creditors are urged to complete their verification to secure their rightful claims before the final deadline.
Editorial Team
Reporter at Coindoo
