FTX Cuts Disputed Claims Reserve by $1.9B, Unleashing $1.9B Creditor Payouts from Sept 30

FTX Trading Ltd. has secured court approval to reduce its disputed claims reserve by $1.9 billion, enabling the next round of creditor payouts to commence on or around September 30, 2025. The U.S. bankruptcy court’s decision, announced in July, adjusts the reserve from $6.5 billion to $4.3 billion, releasing additional liquidity for verified claim holders [1]. This follows two prior disbursement cycles, which returned $6.2 billion to creditors since February 2025, including $1.2 billion in February and $5 billion in May [2]. The upcoming distribution will cover Class 5 Customer Entitlement Claims, Class 6 General Unsecured Claims, and newly approved Convenience Claims, provided claimants complete Know Your Customer (KYC) verification and submit tax documentation by August 15, 2025 [3]. Funds will be processed through institutional custodians BitGo, Kraken, and Payoneer, aligning with the FTX Recovery Trust’s strategy to prioritize cash over digital assets to mitigate volatility and regulatory uncertainties [4].

The repayment plan aims to distribute between $14.7 billion and $16.5 billion in total, with 98% of creditors projected to receive at least 119% of their claims based on pre-bankruptcy valuations. However, approximately $4.3 billion in disputes remain unresolved, with complexities arising from fragmented claim structures and ongoing legal challenges. Notably, the FTX Recovery Trust has proposed a Restricted Jurisdiction Procedure to deny repayments to 49 jurisdictions, including China, Russia, Saudi Arabia, and Pakistan, citing compliance risks. Chinese creditors, who account for 82% of the $800 million in disputed claims, have challenged the proposal as discriminatory. Weiwei Ji, a verified claimant with $15 million in assets, argued in court that crypto remains legally recognized in China and that regulatory assumptions should not penalize users. His objection, filed on behalf of over 300 creditors, highlights the tension between compliance frameworks and equitable distribution [5].

The court’s decision to prioritize cash disbursements reflects broader efforts to stabilize the repayment process amid regulatory ambiguity in crypto insolvencies. While the phased model offers a precedent for similar cases, it also underscores the challenges of balancing compliance with accessibility. Claimants in restricted jurisdictions face exclusion unless courts overturn the motion, pending an omnibus hearing in July 2025. Until then, the status quo remains, with unresolved claims potentially complicating final repayment timelines.

As creditors prepare for the September 30 payout, the case continues to test the adaptability of traditional bankruptcy frameworks to crypto-specific complexities. The FTX Recovery Trust has emphasized transparency, urging stakeholders to monitor updates and meet documentation deadlines. The outcome of pending legal disputes, particularly regarding jurisdictional restrictions, will likely shape the final phase of distributions and set precedents for future crypto insolvencies [6].

Source: [1] [FTX to begin $1.9B payouts in September as claims no longer disputed](https://cointelegraph.com/news/ftx-distribute-1-9-billion-court-approval-cut-disputed-claims)

[2] [FTX to distribute $1.9B to eligible creditors by September 30. Claims deadline set for August 15. BitGo, Kraken, and Payoneer to handle payments.](https://www.fxleaders.com/news/2025/07/24/ftx-to-begin-1-9b-distribution-to-creditors-by-september-30-2025/)

[3] [FTX Recovery Trust announces $1.9B creditor payout starting Sept 30, 2025, after reducing disputed claims reserve by $2.2B.](https://www.ainvest.com/news/ftx-recovery-trust-reduces-disputed-claims-reserve-2-2b-release-1-9b-creditors-payouts-sept-30-2507/)

[4] [FTX will distribute its next round of creditor payments on Sept. 30, 2025, as part of its ongoing repayment plan approved by U.S. bankruptcy courts.](https://www.ainvest.com/news/ftx-disburses-1-9b-creditors-sept-30-reserve-cuts-free-funds-2507/)

[5] [FTX has announced that it will begin its next round of cash distributions to creditors on or around September 30, 2025.](https://cryptonews.com/news/ftx-to-begin-next-round-of-cash-payouts/)

[6] [FTX will start its next creditor payout on Sept. 30, 2025, after a court approved the release of $1.9B. Record date for claims is Aug. 15.](https://crypto.news/ftx-creditor-payment-sept-court-frees-1-9b-2025/)