FTX Expunges Nearly 400,000 Unverified Crypto Customer Claims

FTX Trading Ltd. expunged close to 400,000 creditor claims of customers who failed to timely commence the process to verify their identities.

FTX account holders had until March 3 to at least begin the process of verifying their claims via the “know your customer” procedure to collect from the defunct cryptocurrency platform’s bankruptcy estate. But roughly 392,000 customers failed to take initial steps to satisfy KYC compliance, according to papers filed in the US Bankruptcy Court for the District of Delaware.

In accordance with court-approved procedures, the unverified claims have been “expunged and disallowed” in their entirety, the company said in its April 2 filing, which included a list of claims spanning 2,377 pages.

FTX didn’t provide a calculated value of removed claims. But as of late January, some 460,000 unverified claims eligible for compensation were collectively worth about $1 billion, according to calculations by claims-market.com.

The bankruptcy claims trading site said Friday it is in the process of calculating the total value of expunged claims. All compensable customer claims are worth at least $10.

FTX last year won bankruptcy court approval to liquidate in Chapter 11 and distribute between $12.6 billion and about $16.5 billion to customers whose crypto holdings were trapped on the website when the company collapsed into bankruptcy in November 2022.

The estate, once run by convicted fraudster Sam Bankman-Fried, is providing full cash recoveries to creditors based on the value of their digital currency holdings when the bankruptcy commenced.

Now run by wind-down expert John J. Ray III, FTX has said that customer accounts needed to be verified because the company previously “failed to perform basic due diligence on customers” and often “failed to collect information about the source of funds” sent on the exchanges.

Customers who have commenced the KYC process have until June 1 to complete it, or they too will have their claims expunged.

FTX is represented by Sullivan & Cromwell LLP and Landis Rath & Cobb LLP.

The case is In re FTX Trading Ltd., Bankr. D. Del., No. 22-11068, Notice issued 4/2/25.