$2.5 billion at risk as FTX users face KYC deadline

Nearly 400,000 creditors of the bankrupt cryptocurrency exchange FTX (CRYPTO:FTT) risk losing $2.5 billion in repayments due to failure to comply with mandatory Know Your Customer (KYC) verification requirements.

According to an April 2 court filing in the U.S. Bankruptcy Court for the District of Delaware, roughly 392,000 users have yet to begin or complete the KYC process.

Initially set for March 3, 2025, the KYC deadline has been extended to June 1, offering users a final opportunity to verify their identity and claim eligibility. 

Failure to meet this new deadline will result in permanent disqualification of claims.

Court documents reveal that claims under $50,000 account for approximately $655 million in at-risk repayments, while claims exceeding $50,000 total $1.9 billion. 

Combined, these funds represent over $2.5 billion in potential losses for affected creditors.

The next round of repayments is scheduled for May 30, 2025, with more than $11 billion expected to be distributed to verified creditors holding claims above $50,000. 

Under FTX’s recovery plan, 98% of creditors are projected to receive at least 118% of their original claim value in cash.

Sunil Kavuri, a member of the Customer Ad-Hoc Committee advocating for creditors, emphasised the importance of completing KYC requirements. 

He warned that additional claims would be invalidated after June 1 if documentation remains incomplete.

FTX users have reported difficulties with the verification process but can restart their applications by contacting FTX support and uploading the necessary documents via the KYC portal.

This development follows significant financial losses tied to FTX’s collapse and subsequent bankruptcy proceedings. 

In February, its Bahamian subsidiary distributed $1.2 billion in repayments during the first round of creditor payouts.

At the time of reporting, the FTX (FTT) price was $0.9105.