The situation involving nearly 400,000 FTX users risking the loss of $2.5 billion in repayments is due to their failure to complete the mandatory Know Your Customer (KYC) verification process.
Initially, the deadline for starting this process was March 3, 2025, but it has been extended to June 1, 2025, to give users another chance to verify their identities and maintain their claims.
Approximately 392,000 FTX users have not completed or even initiated the KYC process.
The total amount at risk is over $2.5 billion, with claims under $50,000 accounting for about $655 million and claims over $50,000 totaling approximately $1.9 billion.
Users who fail to meet the new June 1 deadline risk having their claims permanently disqualified and expunged.
Despite these challenges, FTX plans to distribute over $11 billion in repayments starting May 30, 2025.
The repayment plan has been approved by the court, providing a legal framework that ensures transparency and fairness in the distribution process.
The plan allows for further distributions based on ongoing asset recovery efforts, which can potentially increase the total amount available for repayment and enhance fairness by maximizing recoveries.
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