Lost a form, lost your money. That is the lesson from FTX’s bankruptcy proceedings, and it underpins the only dispute scheduled for August 19.
A court calendar filed on Monday keeps only one customer request before Chief Judge Karen B. Owens. Applicant Daizhuo Chen is seeking a second chance for a verification deadline he missed.
What remains on FTX’s bankruptcy docket
Chen filed his request on March 27. He asks that Owens reverse her refusal to allow him to complete the verifications after the deadline.
He cites the Federal Rules of Civil Procedure 59(e) and 60(b)(2). These rules allow a judge to reopen a decision when new evidence emerges. Owens did not claim that this happened in this case.
The timeline is strict and well documented. The FTX advised customers to start the verification process by March 1, 2025 and to complete it by June 1, 2025. Both deadlines ended at 5:00 p.m. Brasília time.
The FTX Recovery Trust, the entity responsible for winding up the bankrupt estate, filed a new appeal on July 16. It has already contested similar requests previously.
Chen is not the only one. D1 Ventures is trying to recover $251 thousand in USDC and USDT since December 2022. The Trust says this account has also not completed verification.
The case was delayed again without any new scheduling. Two other cases were also postponed and remain pending.
Ernst & Young submitted a final request for fees. The lawyers will file the orders without the need for debate, a further sign that the bankruptcy estate is nearing closure.
Why missing the KYC deadline could cost a lender everything
Verification is the requirement for receiving payments. Claimants must undergo know your customer (KYC) checks, submit tax forms, and register with BitGo, Kraken, or Payoneer.
If any step is ignored, the money moves on to the others. The Trust said that hundreds of thousands of customer claims have already been rejected for failing to meet these requirements.
The difference between the affected groups is significant. Creditors who completed all documentation have already recovered their full credits, and some categories received even more.
Convenience claims, 120% recovered
Claims from US customers, 100%
General claims without guarantee, 100%
Dotcom customer claims, 96%
These amounts cover four rounds of payments through March 31, distributing about $2.2 billion. Approximately $900 million was transferred on July 31, the smallest distribution ever made by FTX.
Funds are still reserved for legal disputes. The Trust asked to reduce this reserve by $600 million, from $2.4 billion to $1.8 billion.
So Owens' argument could have an impact beyond Chen's case. All excluded customers due to documentation issues will review this decision in search of a new chance.
Sam Bankman-Fried has no involvement in these deliberations. His conviction and 25-year sentence were upheld in June. The appeal warrant issued in August ended the case in the Second Circuit.
The hearing will begin at 10:30 a.m. Brasília time on Wednesday via Zoom. Owens is expected to speak immediately. His decision will indicate to everyone who missed the deadline whether there are still options for appeal.
An article on the FTX bankruptcy hearing, which reached its final dispute, was first seen in BeInCrypto Brazil.