The FTX bankruptcy case, one of the most high-profile disasters in cryptocurrency history, is nearing its logical conclusion. Only one unresolved issue remains on the court's agenda, with its hearing scheduled for August 19. In essence, this is the final stumbling block separating the finish line from a multi-year saga of returning funds to creditors.
The Essence of the Final Dispute
At the center of attention is a motion by a plaintiff named Daigo Chen, who is asking Judge Karen Owens to give him a second chance. He missed the verification deadline, and his compensation claim is now under threat of complete annulment. Chen filed his request back on March 27, citing federal rules of civil procedure that allow for reconsideration of a decision when new evidence emerges. However, Judge Owens has so far seen no grounds for reconsideration.
Chen's situation is not unique. The fact is that the fund return procedure was strictly regulated: clients were required to undergo KYC verification by March 1, 2025, and complete it by June 1, 2025. Both deadlines have passed, and now latecomers are trying to challenge the strictness of the rules. The FTX Recovery Trust, which manages the exchange's assets, has already opposed Chen's motion, noting that similar requests have been rejected in the past.
The case of D1 Ventures is also telling: since December 2022, it has been trying to recover $251,000 in USDC and USDT. This account also failed verification, and hearings on it are endlessly postponed. It is clear that the Trust is determined: hundreds of thousands of claims have been rejected precisely due to non-compliance with procedures.
The Price of Bureaucracy
For those who made it in time, the FTX bankruptcy turned out to be an unexpected bonus. Creditors who passed all checks have already received their funds in full, and some categories even received more. Simplified claims yielded a 120% return, US clients received 100%, as did holders of general unsecured claims. Only Dotcom client claims lagged slightly behind at 96%.
These payments reflect the progress achieved so far. The fourth round of distributions, which took place on March 31, amounted to approximately $2.2 billion, and on July 31, another roughly $900 million was distributed—the smallest payout in the history of the process. Meanwhile, part of the funds remains reserved for disputed claims, and the fund is seeking to reduce the reserve by $600 million—from $2.4 billion to $1.8 billion.
Judge Owens' decision, which will be announced directly at the hearing on Wednesday at 9:30 AM Eastern Time, will serve as a signal for everyone who missed the deadline for whatever reason. It will determine whether latecomers have any chance at all of recovering their funds. Sam Bankman-Fried, the founder of FTX, is no longer involved in this process—his fate has been definitively decided, and the appellate mandate issued in August put an end to his case.
My view: The strict position of the Trust and the court is not mere formalism but a necessary mechanism for concluding the proceedings. Otherwise, the fund return process could drag on for years. However, for those who missed the deadlines due to carelessness or technical glitches, this will serve as a bitter but instructive lesson that in the world of finance, bureaucracy can be more ruthless than the market.