FTX’s $1.9B Creditor Payout Looms—Legal Firestorms Over Restricted Countries Rage On

FTX is gearing up to unleash a $1.9 billion lifeline to creditors—but the legal minefield isn’t going anywhere.

Here’s the catch: While the exchange scrambles to settle debts, regulators are still sharpening their knives over its dealings in restricted jurisdictions. Talk about a high-stakes game of whack-a-mole.

Meanwhile, crypto’s favorite punching bag just won’t quit. Will the payout calm the storm—or pour gasoline on the fire?

Pro tip for distressed creditors: Don’t spend that check before it clears. This is crypto, after all.

FTX will begin its third round of creditor payments on September 30, 2025, distributing $1.9 billion to eligible claimants.

This latest payout follows previous distributions of $1.2 billion in February and $5 billion in May 2025. Together with the upcoming September distribution, FTX has returned over $8 billion to creditors since beginning repayments earlier this year.

Court Approval Opens Door for September Distribution

The U.S. Bankruptcy Court in Delaware authorized the release after determining that certain claims previously marked as disputed could be reclassified. Creditors must meet a record date of August 15, 2025, to qualify for the September payout.

Three companies will handle the payments: BitGo, Kraken, and Payoneer. Each creditor must complete identity verification and submit tax documents through one of these platforms. Those who fail to meet the August deadline will miss this distribution round.

The court’s decision reduces uncertainty for thousands of creditors holding Class 5 Customer Entitlement Claims, Class 6 General Unsecured Claims, and certain Convenience Claims. These groups represent the majority of people who lost money when FTX collapsed in November 2022.

“The Next Distribution is expected to commence on or about September 30, 2025.”Source: @FTX_Official

Major Legal Fight Over Restricted Countries

A significant controversy threatens to exclude creditors from 49 countries where crypto regulations remain unclear or restrictive. FTX filed a motion in July seeking to freeze approximately $470 million in claims from these regions, citing legal risks.

China represents the largest affected group, accounting for 82% of the restricted claims at roughly $380 million. Other countries on the list include Russia, Egypt, Ukraine, Pakistan, and Saudi Arabia. The exchange argues that sending payments to these regions could expose directors and officers to fines or criminal charges.

Chinese creditor Weiwei Ji has filed objections representing over 300 affected users. Ji argues that payments in U.S. dollars should be legally permissible and that Chinese law recognizes digital assets as personal property. The creditor community has submitted more than 90 formal objections to the proposed restrictions.

During a court hearing on July 23, the judge directed FTX to revise its motion rather than making an immediate ruling. The court specifically stated that the exchange cannot seize creditor funds and must provide a clear process for countries to be reclassified from restricted to non-restricted status.

Valuation Disputes Create Additional Tension

Another source of frustration involves how FTX calculates claim values. The exchange uses cryptocurrency prices from November 2022, when Bitcoin traded around $16,000-$20,000. With Bitcoin now trading above $120,000, many creditors argue they’re receiving far less than their assets are actually worth.

The court has maintained this November 2022 valuation approach to ensure consistency across all claims. However, some creditors are considering legal challenges to this methodology, arguing it unfairly reduces their recovery amounts.

Despite these valuation concerns, FTX’s reorganization plan approved in October 2024 allows for repayment of up to $16.5 billion total. The plan includes full principal plus 9% annual interest for most non-governmental creditors, meaning many will ultimately receive more than their original claim amounts.

Market Impact and Claims Trading

News of the restricted countries motion has caused claim prices to drop 20-30% for affected jurisdictions. A secondary market has emerged where creditors can sell their claims to investment funds, though prices vary significantly based on the creditor’s location and claim status.

Approximately $5.8 billion in FTX claims have been sold to credit-focused funds since the bankruptcy began. Some creditors in restricted countries are considering selling rather than risk losing everything if their jurisdiction gets permanently blocked from payments.

The trading market reflects broader uncertainty about the bankruptcy process. While progress continues on distributions, unresolved legal questions create ongoing volatility in claim values.

Preparation Requirements for September Payout

Creditors wanting to receive September payments must act quickly. The August 15 record date means all verification requirements must be completed within weeks. This includes:

• Completing know-your-customer verification with BitGo, Kraken, or Payoneer
• Submitting required tax documentation
• Ensuring claims appear correctly in the official register

For creditors who bought or sold claims, transfers must be finalized and registered by the deadline. A 21-day notice period must also pass without challenges to the transfer.

FTX warns that it will never ask creditors to connect external wallets or provide private keys. All legitimate communications come through official channels and the approved distribution platforms.

Looking Ahead: More Distributions Planned

While September’s $1.9 billion payout represents progress, approximately $4.3 billion remains in disputed claims reserves. The resolution of the restricted countries issue will significantly impact future distributions and could set precedents for other crypto bankruptcy cases.

FTX creditor advocate Sunil Kavuri estimates that $1.4 billion in claims still await some FORM of resolution. The ongoing legal battles over jurisdictional restrictions and valuation methods suggest the bankruptcy process will continue well into 2026.

The September distribution offers hope for many creditors who have waited years for compensation. However, the exclusion of creditors from restricted countries and ongoing legal challenges highlight the complex international nature of cryptocurrency bankruptcy proceedings. Success in resolving these issues could provide a framework for handling future crypto exchange failures, while failure could leave hundreds of millions in claims permanently frozen.