FTX Won’t Pay $2.5B in Customer Claims — Here’s Why

The bankruptcy estate of the defunct cryptocurrency exchange FTX has revealed that it will not be paying roughly $2.5 billion in claims to victims of its collapse as creditor repayments continue.

According to a filing with the U.S. Bankruptcy Court for the District of Delaware, customers affected by the latest development are those who failed to commence their know-your-customer (KYC) verification process by the deadline, which passed a month ago.

FTX Expunges Customer Claims

The bankruptcy estate said it is disallowing and expunging claims belonging to users who did not start their KYC by March 3. The KYC commencing deadline was initially fixed for March 1 but eventually extended to March 3.

Although the value of the unverified claims was initially estimated to be around $1 billion, FTX creditor activist Sunil Kavuri has disclosed a higher worth. He said claims less than $50,000 amount to $655 million, while those above $50,000 are up to $1.9 billion. The total number of customers affected by the expungement is above 392,000, and FTX filed their details in a document spanning 2,377 pages.

While claims for users who have failed to start their KYC procedures have been disallowed, more customers are bound to face the same fate if they do not complete their identity verification processes by June 1. The bankruptcy estate insists that customers must submit the necessary KYC documents before receiving their claims.

“Claims listed on Schedule 1 to the Order but not included on Exhibit A attached hereto may still be subject to disallowance if the holder of any such claim does not submit all KYC information requested by the FTX Recovery Trust or its KYC vendors on or prior to June 1, 2025, at 4:00 p.m. (ET),” the estate stated in the filing.

Bankruptcy Estate Insists on Account Verification

FTX’s customer repayments have been ongoing since January 3, 2025, with the estate intending to distribute between $12.6 billion and about $16.5 billion to users. As approved by the court, FTX customers are receiving cash based on the value of their crypto holdings at the time of the bankruptcy filing in November 2022.

The entity’s interim CEO, John Ray, insisted that customer accounts need to be verified during the repayment process because the company’s former leadership did not conduct due diligence on users and failed to collect information about the source of funds.