FTX to distribute $1.9B to creditors in September 2025 after court reduces disputed claims reserve by $1.9B

FTX Trading Ltd. and the FTX Recovery Trust have announced the next phase of cash distributions to creditors, set to begin on or around September 30, 2025. This follows a U.S. bankruptcy court-approved reduction of the disputed claims reserve by $1.9 billion, lowering it from $6.5 billion to $4.3 billion. The released funds will be allocated to permitted claims, including Class 5 Customer Entitlement Claims, Class 6 General Unsecured Claims, and Convenience Claims, provided claimants meet pre-distribution requirements by August 15, 2025. These requirements include Know Your Customer (KYC) verification, submission of tax documentation, and onboarding through approved platforms such as BitGo, Kraken, and Payoneer [1]. The distribution marks the third round of payouts since February 2025 and builds on previous disbursements totaling approximately $6.2 billion to creditors since the exchange’s collapse in November 2022 [2].

The process underscores the ongoing restructuring efforts under the Delaware Bankruptcy Court’s oversight. However, challenges persist, particularly in 49 jurisdictions where legal disputes over claim eligibility remain unresolved. FTX has proposed a Restricted Jurisdiction Procedure to address compliance risks, but an omnibus hearing in July 2025 will determine whether distributions to these regions proceed. Notably, claims from these jurisdictions amount to $800 million, with China accounting for 82% of the total. Critics argue that excluding claimants based on regulatory assumptions may disproportionately affect smaller users unfamiliar with complex compliance protocols [3].

The FTX Recovery Trust has emphasized its strategy to mitigate crypto market volatility by distributing cash equivalents instead of digital assets. This approach aligns with traditional bankruptcy practices and leverages institutional custodians like Kraken and BitGo to ensure compliance. The Trust cited the reserve reduction as a milestone in streamlining creditor repayments while addressing legal uncertainties tied to cross-jurisdictional claims [4]. Despite progress, approximately $4.3 billion in claims remain under scrutiny, with full resolution potentially taking years due to fragmented claim structures and unresolved disputes.

The distribution highlights the complexities of managing crypto insolvencies in a regulatory gray area. While the phased model offers a precedent for similar cases, it also exposes tensions between compliance demands and equitable distribution. For instance, claimants from restricted jurisdictions or those unable to meet KYC requirements risk exclusion, raising concerns about accessibility. Legal experts note that the outcome of the July 2025 hearing could reshape the framework for reclassifying jurisdictions, but until then, the status quo remains in place [5].

As the September 30 payout date approaches, creditors are urged to finalize documentation and monitor updates from the FTX Recovery Trust. The court’s decision to prioritize cash disbursements reflects a broader effort to stabilize the repayment process amid ongoing legal challenges. Yet, the case remains a test of how traditional bankruptcy frameworks adapt to crypto-specific complexities, particularly in balancing regulatory compliance with fair compensation for affected users [6].

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/)