FTX cuts $2.5 billion in claims after 392K users fail to meet KYC deadline
FTX narrows liabilities by disqualifying nearly 400K claims
FTX’s bankruptcy saga has entered a pivotal new chapter. Nearly 392,000 customer claims—collectively worth as much as $2.5 billion—have been disqualified after users failed to complete mandatory identity verification before the March 3 deadline.
As CoinPedia reports, this move underscores FTX's increasingly stringent enforcement of Know Your Customer (KYC) protocols under its new leadership.
On April 2, the U.S. Bankruptcy Court confirmed that claims from 392,000 users were invalidated due to failure to meet ID verification standards. These rejected claims span over 2,300 pages of court records. According to creditor advocate Sunil Kavuri, the real value of the disqualified claims could be significantly higher than earlier estimates, potentially reaching $2.5 billion—including approximately $655 million in small claims (under $50,000) and $1.9 billion in large claims.
A massive wave of disqualifications
The scale of the disqualification significantly reduces FTX's total liabilities, which may ultimately improve recovery prospects for users who complied with verification requirements.FTX’s new administration has emphasized that verifying user identities is critical to avoid fraud and ensure the equitable distribution of remaining assets. The previous management, under Sam Bankman-Fried, was criticized for lax compliance standards and a general lack of due diligence.
Repayments begin in May
While FTX’s disqualification of unverified claims may be seen as controversial, it marks a critical milestone in streamlining the creditor repayment process and restoring some order after one of the most high-profile collapses in crypto history.
FTX’s legal team noted that it has received an overwhelming number of submissions—some exaggerated or outright fraudulent. These include a so-called “27 quintillion” in total claims, highlighting the challenge of filtering genuine cases amid massive data noise.
Despite the complex and chaotic nature of the bankruptcy process, FTX is preparing to begin repayments. The exchange has recovered approximately $11.4 billion, which will begin to be distributed to eligible creditors starting May 30. The repayment plan offers full cash compensation based on the market value of users’ assets as of November 2022.
