FTX to Begin $1.9B Creditor Payouts on Sept 30 After Court Cuts Disputed Claims Reserve by $2.2B

FTX has announced the commencement of a $1.9 billion payout to creditors on September 30, 2025, following a U.S. bankruptcy court’s approval to reduce the disputed claims reserve from $6.5 billion to $4.3 billion. The distribution, which marks the third round of repayments since February, will prioritize claimants whose requests are no longer classified as disputed. A record date of August 15, 2025, has been set to determine eligibility, requiring creditors to submit documentation by this deadline [1]. The funds will be distributed through third-party platforms such as BitGo, Kraken, and Payoneer, with unverified users potentially excluded due to Know Your Customer (KYC) compliance requirements [2].

The reduction in the disputed claims reserve—releasing $2.2 billion in previously held funds—signifies progress in resolving uncertainties that delayed FTX’s financial recovery. However, approximately $4.3 billion in claims remains under dispute, including those from restricted jurisdictions. Sunil Kavuri, an FTX creditor, noted that creditors in China and other flagged regions likely will not receive this payout, as their claims have not yet been approved by the August 15 deadline. Kavuri also highlighted that this round may cover partial payments for claims exceeding $50,000 [1].

The court’s decision to approve the reserve reduction followed a contentious July 22 hearing where the estate sought to freeze payments to 49 jurisdictions over legal compliance concerns. While the motion for restricted jurisdictions has not yet received a formal ruling, the court directed FTX to revise its proposal, emphasizing the need for a clearer framework to reclassify jurisdictions from restricted to non-restricted. Creditors and legal experts criticized the initial motion for lacking feasibility, with one attendee noting the court’s requirement for a “much more detailed and workable framework” to address creditor concerns [3].

The September distribution underscores the structured approach of FTX’s repayment plan, which has faced prolonged complexities due to regulatory scrutiny and claim disputes. Payments will target fifth- and sixth-tier creditors, excluding higher-priority obligations such as those to regulatory agencies or secured lenders [4]. This phase aligns with the broader timeline of FTX’s liquidation, initiated after its collapse in late 2022, though full resolution of liabilities is expected to take years due to the fragmented nature of crypto claim holdings [5].

Third-party payment processors have been tasked with ensuring compliance, introducing logistical challenges for smaller claimants unfamiliar with platforms like BitGo or Kraken. While KYC protocols are necessary to prevent fraud, they may limit accessibility for some users, raising potential concerns in the final stages of the repayment process [6]. As the distribution date nears, creditors are advised to monitor updates from the FTX Recovery Trust and adhere to documentation requirements to avoid exclusion.

The case highlights the evolving role of U.S. bankruptcy courts in managing crypto-related insolvencies, a relatively untested legal domain. The phased payout model, combining dispute resolution with incremental distributions, may set a precedent for future cases involving high-leverage crypto entities. However, the exclusion of certain claimants and unresolved jurisdictional disputes underscore the ongoing challenges in achieving equitable outcomes in a sector prone to volatility and regulatory ambiguity [7].

Sources:

[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/)

[7] [FTX will begin its next creditor payout on September 30, 2025, following a $1.9B reserve reduction and August 15 record date.] (https://cryptobriefing.com/ftx-next-distribution-record-date-september-2025/)