Nearly 400,000 former users of FTX may permanently lose their chance at recovering an estimated $2.5 billion after missing a critical Know Your Customer (KYC) deadline, according to a new court filing in the FTX bankruptcy case.

In a notice filed on April 2 in the US Bankruptcy Court for the District of Delaware, lawyers representing the FTX Recovery Trust confirmed that 392,000 customer claims are being expunged because those individuals failed to initiate the KYC verification process before the March 3 deadline.

The move comes under an earlier court order issued on February 3, which permitted the FTX Recovery Trust to disallow and expunge unverified claims unless affected users began the KYC process by 4:00 p.m. ET on the deadline. The ruling is part of an effort to wind down the sprawling bankruptcy proceedings of FTX Trading Ltd. and its affiliates, which collapsed in November 2022 amid revelations of misused customer funds and alleged fraud.‍

Missed Deadline, Missed Billions

The implications are massive. The claims now disqualified amount to roughly $2.5 billion—money that could have been distributed back to users had the KYC process been initiated in time.

“These claims are now permanently disallowed,” the filing states, adding that the Recovery Trust attached the list of invalidated claims—Exhibit A—to its official court notice.

The court did grant an extension beyond the original March 1 date, moving the final deadline to March 3 in accordance with federal court rules. However, for nearly 400,000 creditors, that brief extension still wasn’t enough.‍

Still Time for Some

Not all hope is lost for every claimant. The Recovery Trust clarified that users who did initiate the KYC process but have yet to fully complete it may still preserve their claims—if they submit the required information by June 1, 2025.

Those who fail to do so by then may face disallowance in a second wave of expungements.‍

A Stark Reminder

The FTX bankruptcy, one of the largest and most complex in crypto history, continues to unfold with court filings, restructuring efforts, and creditor battles drawing out over years. The recent KYC enforcement highlights one of the most basic, yet overlooked, steps in claiming repayment.

This situation serves as a cautionary tale for anyone navigating bankruptcies in the digital asset world: compliance isn’t optional, and deadlines matter.

For affected users, the list of disallowed claims and further details are available on the FTX Recovery Trust’s official claims portal.