Nikolas Sargeant
Bankrupt cryptocurrency exchange FTX has scheduled its next major creditor distribution for September 30, 2025, following a significant court-approved reduction in disputed claims reserves. The announcement Wednesday marks another milestone in the exchange's complex bankruptcy proceedings, with eligible claimants required to meet an August 15 record date.
The upcoming distribution will cover holders of allowed claims across multiple categories, including Class 5 Customer Entitlement Claims, Class 6 General Unsecured Claims, and approved Convenience Claims processed since the previous payout round. FTX will process payments through its established distribution partners: BitGo, Kraken, and Payoneer.
This distribution follows FTX's previous success in returning approximately $6.2 billion to creditors since beginning the repayment process earlier this year. The exchange's restructuring efforts have accelerated following court approval of its comprehensive redistribution plan.
Court Approves $1.9 Billion Claims Reserve Reduction
FTX received crucial Bankruptcy Court approval to reduce its disputed claims reserve from $6.5 billion to $4.3 billion, freeing up $1.9 billion in additional liquidity for creditor distributions. This adjustment significantly enhances the exchange's capacity to accelerate payouts to approved claimants.
The reserve reduction reflects ongoing progress in resolving disputed claims and provides greater certainty about available assets for distribution. FTX emphasized that payments will only reach claimants who have completed mandatory Know Your Customer verification, submitted required tax documentation, and successfully onboarded with designated distribution platforms.
Creditors with transferred claims must ensure their transfers are fully processed and officially recorded before the August 15 record date to qualify for September distributions. This requirement maintains the integrity of the claims process while preventing fraudulent distributions.
The exchange's collapse in November 2022 stemmed from a liquidity crisis triggered by balance sheet revelations, ultimately leading to criminal charges against founder Sam Bankman-Fried. He received a 25-year prison sentence in 2023 for defrauding customers and investors of over $11 billion, though federal records indicate a projected release date of December 14, 2044, after serving approximately 21 years for good behavior.
Geographic Distribution Challenges Emerge
FTX faces opposition from Chinese creditors over proposed restrictions affecting 49 jurisdictions, including China, Russia, and Pakistan. Chinese creditor Weiwei Ji, representing over 300 users with $15 million in verified claims, argues that geographical payment restrictions lack legal foundation and unfairly penalize users based on regulatory assumptions.
Ji contends that Chinese users should not face discrimination, particularly given available legal pathways through Hong Kong for international transactions. The objection challenges FTX Recovery Trust's motion to evaluate claims across jurisdictions flagged as "potentially restricted."
Claims from the 49 affected jurisdictions total approximately $800 million, with China representing 82% of this amount according to data cited by The Block. This substantial geographic concentration creates significant implications for FTX's distribution strategy and overall creditor recovery rates.
The dispute highlights complex international regulatory considerations affecting bankruptcy proceedings involving global cryptocurrency exchanges. Resolution of these geographic restrictions will significantly impact the scope and timeline of future distributions.
Restructuring Progress Continues Despite Challenges
FTX's ability to maintain distribution schedules despite legal challenges demonstrates the effectiveness of its court-approved restructuring framework. The exchange has successfully navigated complex creditor verification processes while managing substantial asset recovery and distribution logistics.
The September payout represents continued progress toward fulfilling creditor obligations, though geographic restrictions may affect the total number of eligible recipients. FTX's partnership with established platforms like BitGo, Kraken, and Payoneer provides creditors with multiple access options for receiving distributions.
As bankruptcy proceedings advance, FTX continues balancing creditor recovery with regulatory compliance across multiple jurisdictions, setting precedents for future cryptocurrency exchange bankruptcies and international asset distribution challenges.
