FTX Creditors Battle $2.2 Billion Dispute Amid Payment Delays

FTX users are currently engaged in a battle to unlock approximately $2.2 billion in disputed bankruptcy claims. The FTX Recovery Trust initiated its second round of payments on May 30, distributing over $5 billion in digital assets to eligible creditors who had completed the necessary pre-distribution requirements. However, a significant portion of the claims, estimated to be around $2.25 billion, remains in dispute. Sunil, a member of the FTX Customer Ad-Hoc Committee, highlighted that while the current allowed claims amount to $7.5 billion, the total estimated allowed claims are $10.6 billion, with 30% of these claims still under dispute. Sunil expressed optimism that most of the disputed claims would be approved for the next distribution, although there is considerable uncertainty surrounding the claims, which constitute 8% of the total claims in the bankruptcy proceedings. The timeline for these payments remains unclear until a distribution provider supporting is identified.

The first round of FTX creditor payments, which took place on February 18, saw $1.2 billion distributed to recipients with claims of less than $50,000. This recent development comes on the heels of FTX partnering with a third payment distribution service provider, which offers cross-border payment services in over 190 countries. This provider is expected to primarily assist with retail customer payouts, alongside existing partners.

Despite these efforts, multiple FTX creditors have reported difficulties in completing their Know Your Customer (KYC) verification process for the repayments. One user expressed frustration over the lack of response regarding their KYC status for the past five months. Another creditor felt interrogated during the verification process, despite having a claim of less than $5,000. These issues highlight the challenges faced by creditors in navigating the complex and time-consuming KYC procedures, which are crucial for ensuring the legitimacy of the claims and preventing fraudulent activities.