Bankrupt cryptocurrency exchange FTX is currently under scrutiny as users are actively contesting at least $2.2 billion in disputed claims. These creditors are facing significant hurdles in getting their repayments approved, adding another layer of complexity to the already intricate bankruptcy proceedings.

The FTX Recovery Trust initiated its second round of payments on May 30, distributing over $5 billion worth of digital assets to eligible creditors who had successfully completed the pre-distribution requirements. However, a notable portion of claims, estimated to be around $2.25 billion, remains disputed.

Sunil, a member of the FTX Customer Ad-Hoc Committee, highlighted the situation in a June 11 post, stating that while the current allowed claims amount to $7.5 billion, the total estimated allowed claims reach $10.6 billion. This means that approximately 30% of the allowed claims are still under dispute, creating uncertainty for numerous creditors. Despite these challenges, Sunil expressed optimism that the majority of legitimate disputed claims would eventually be approved in future distributions.

The FTX estate holds an additional $6.5 billion in reserve specifically for disputed claims, signaling a commitment to addressing and resolving these outstanding repayments. The first round of FTX creditor payments occurred on February 18, distributing $1.2 billion to recipients with claims under $50,000.

A significant challenge involves claims, particularly those originating from Chinese creditors, which constitute approximately 8% of the total claims in the bankruptcy proceedings. The timeline for resolving these payments remains unclear due to the absence of a distribution provider capable of supporting transactions in China.

Adding to the difficulties, multiple FTX creditors have reported issues completing the mandatory Know Your Customer (KYC) verification process required for repayments. Some users have expressed frustration over the lack of communication regarding their KYC status, with one user reporting no response for over five months. Others have described the verification process as overly intrusive, even for relatively small claims.

In early April 2025, it was revealed that nearly 400,000 FTX users risked forfeiting approximately $2.5 billion in repayments if they failed to complete the KYC process by the extended deadline of June 1, 2025. This underscores the critical importance of regulatory compliance in the cryptocurrency industry and the potential consequences of non-compliance for users.

Under the approved reorganization plan, initial repayments commenced within 60 days of the plan taking effect on January 3, 2025. Cryptocurrency platforms Kraken and BitGo are facilitating these repayments to eligible creditors. The first phase prioritized creditors with claims of $50,000 or less, accounting for over 90% of all creditors in the FTX bankruptcy case. Larger claims are being addressed in subsequent rounds.

Creditors are slated to receive the U.S. dollar value of their crypto holdings based on asset prices at the time of FTX's bankruptcy filing in November 2022. While the plan anticipates that roughly 98% of creditors will recover about 118% of their claims in U.S. dollar terms, this is based on valuations frozen at pre-collapse rates, which are significantly lower than current market prices.

Recent developments include FTX partnering with Payoneer, a fintech firm operating in over 190 countries, to expedite international customer repayments. Payoneer joins BitGo and Kraken as distribution service providers. This move aims to simplify cross-border payments, allowing customers to receive payouts in their local currencies, albeit with a forfeiture of direct USD distributions.

The FTX saga continues to unfold, with ongoing legal battles and efforts to ensure accountability. Shaquille O'Neal, for instance, reached a $1.8 million settlement over allegations of promoting FTX. Meanwhile, Binance is seeking to dismiss a $1.76 billion lawsuit from the FTX estate, adding another layer of complexity to the resolution process. As the bankruptcy proceedings progress, the focus remains on maximizing asset recovery and ensuring a fair and transparent distribution to creditors, even as challenges and disputes persist.