FTX Court Cuts Disputed Claims $2.2B, Unleashing $1.9B Creditor Payout

The FTX Recovery Trust and debtor FTX Trading have announced the upcoming distribution of $1.9 billion to creditors, set to begin on September 30, 2025. This payout follows a reduction in disputed claims reserves from $6.5 billion to $4.3 billion, approved by the U.S. Bankruptcy Court. The funds will be allocated to eligible claimants whose claims were finalized by the August 15 record date, marking the third major repayment in FTX’s bankruptcy proceedings. Previous distributions included $1.2 billion in February and $5 billion in May, collectively returning over $6.2 billion to creditors [1].

The distribution will prioritize holders of Class 5 Customer Entitlement Claims, Class 6 General Unsecured Claims, and approved Convenience Claims. However, claimants must complete KYC verification and submit tax documentation to qualify. Notably, creditors in jurisdictions flagged for legal restrictions—potentially including China—are unlikely to receive payments this round. Sunil Kavuri, an FTX creditor, stated that claims in these regions have not been approved and are unlikely to meet the August 15 deadline. The estate has faced criticism for the proposed restrictions, with objections citing potential discrimination in cross-border crypto bankruptcy cases [2].

The court’s approval of FTX’s reduced reserve has freed up liquidity for immediate distribution, though jurisdictional disputes remain unresolved. A July 22 hearing on the estate’s motion to freeze payments to 49 jurisdictions has yet to receive a formal ruling. The court directed FTX to revise the motion, emphasizing the need for a clear framework to reclassify restricted jurisdictions. As of now, the motion remains under revision, with creditors awaiting clarity on eligibility criteria [3].

The $1.9 billion payout reflects progress in FTX’s court-oversight framework, despite ongoing legal challenges. The estate has streamlined claims processing to accelerate repayments, a strategy credited with restoring trust in the recovery plan. However, future distributions depend on resolving jurisdictional disputes and completing verifications. Chinese creditors, representing $800 million in claims (82% of affected jurisdictions’ total), have voiced concerns over unequal treatment, highlighting the complexity of managing cross-border debt in the crypto sector [4].

FTX’s restructuring efforts underscore broader challenges in crypto bankruptcy, particularly as regulatory frameworks evolve. The exchange’s ability to meet distribution milestones amid legal hurdles suggests a viable model for similar cases. Yet unresolved disputes over jurisdictional restrictions and claim approvals could impact recovery rates for certain creditors.

Source: [1] [FTX To Pay Creditors $1.9B After Claim Dispute Cut](https://cointelegraph.com/news/ftx-distribute-1-9-billion-court-approval-cut-disputed-claims)

[2] [FTX Recovery Trust Reduces Disputed Claims Reserve by](https://www.ainvest.com/news/ftx-recovery-trust-reduces-disputed-claims-reserve-2-2b-release-1-9b-creditors-payouts-sept-30-2507/)

[3] [FTX Announces September Cash Payouts](https://www.cryptowisser.com/news/ftx-announces-september-cash-payouts-claims-adjustment/)

[4] [FTX Sets August 15 Record Date for Next $1.9B Creditor](https://coincentral.com/ftx-sets-august-15-record-date-for-next-1-9b-creditor-distribution/)