FTX has disqualified nearly 400,000 customer claims after users failed to begin verifying their identities by a March 3 deadline, potentially wiping out up to $2.5 billion in claims due to know-your-customer noncompliance.
An April 2 filing in the US Bankruptcy Court for the District of Delaware confirms that 392,000 claims have already been “disallowed and expunged in their entirety.”
The affected claims are listed across 2,377 pages.
While earlier estimates pegged the value of unverified claims at around $1 billion, FTX creditor advocate Sunil Kavuri now says the total may be much higher.
He estimates that $655 million in claims under $50,000 and another $1.9 billion in larger claims are subject to disqualification based on KYC violations, adding up to more than $2.5 billion.
This subset is part of a broader $3.36 billion in projected disallowed claims disclosed by FTX in its disputed claims reserve breakdown.
FTX says the process is essential after the company, under its previous leadership, failed to collect key user data or conduct basic due diligence.
Meanwhile, the exchange plans to begin repaying its primary group of creditors on May 30, marking a major step in the wind-down of one of crypto’s largest corporate failures.
FTX has gathered $11.4 billion for distributions and is offering full cash recoveries based on asset values at the time of its November 2022 collapse.
Despite this progress, the bankruptcy process remains fraught. FTX’s legal team said it has received “27 quintillion” total submissions, many of them fraudulent or inflated.
Crypto market movers
- Bitcoin has lost 1% over the past 24 hours and is trading at $83,645.
- Ethereum is down 0.6% in the same period to $1,815.
What we’re reading
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Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at kbaird@dlnews.com.