Thousands of FTX creditors risk forfeiting a collective $2.5 billion in claims after failing to meet a key Know Your Customer (KYC) deadline required for participation in the collapsed exchange’s bankruptcy recovery process.
The deadline, which required creditors to verify their identities through FTX’s designated platform, was part of court-approved procedures aimed at ensuring compliance and streamlining the payout process. Those who missed the cutoff may now be excluded from receiving distributions, despite having filed valid claims.
FTX’s restructuring team had issued multiple reminders ahead of the deadline, warning that failure to complete KYC could result in disqualification. The platform’s terms of distribution emphasize regulatory obligations and the need to confirm user identities before funds can be released.
With creditor payouts expected to begin later this year, the exclusion of non-compliant claimants could significantly impact the final distribution pool. Legal experts note that while there may be limited recourse for those who missed the deadline, further legal action or appeals could still arise.
The development marks another dramatic twist in the FTX bankruptcy saga, highlighting the complexities of asset recovery in one of crypto’s largest corporate collapses.
