FTX creditors have launched a class action lawsuit against Kroll Restructuring Administration, the firm managing claims for the bankrupt crypto exchange.

The suit, filed on Aug. 20 by US-based Hall Attorneys, alleged that Kroll’s handling of claims for FTX, BlockFi, and Genesis customers caused financial harm and exposed sensitive information to cybercriminals.

According to the lawsuit, Kroll knew emails were unsafe, as it consistently warned about phishing risks after it suffered a data breach incident in August 2023.

At the time, an unauthorized party gained access to a Kroll employee’s mobile number, which allowed entry into Kroll’s systems and exposure of creditor data, including names, addresses, email contacts, and some FTX account balances.

However, the firm reportedly continued to send critical notices solely via email, leaving claimants vulnerable to scams and phishing attacks.

Notably, Sunil Kavuri, a prominent FTX creditor, confirmed that phishing emails have become a daily concern for the defunct exchange’s users. He noted receiving a fraudulent message containing his full name just hours before posting about it on X.

Meanwhile, the lawsuit claims Kroll’s approach also caused verification delays, lockouts, and, in certain cases, the loss of claims by FTX creditors.

Considering this, Nicholas Hall, the lead counsel on the case, urged FTX creditors to join the legal battle. According to him:

“All creditors are encouraged to participate; it’s for both US and Bahamas customer-creditors.”

He also pointed out that the suit seeks compensation for losses related to phishing attacks, delayed claims, and expunged filings. Hall said:

“[FTX creditors could get] monetary relief for eligible class members (for example, up to $750 or actual damages for California victims, but depends on class, residency, etc.).”

Beyond monetary relief, plaintiffs are demanding practical reforms, including multi-channel communications through both email and First-Class Mail, status-change notifications with mandatory response periods, a manual tax-form option, and stricter security controls for account changes, such as mailing verification codes before permitting updates.

Additional demands include deliverability safeguards and independent audits to strengthen data protection.

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The FTX Recovery Trust has set Aug. 15 as the record date for its next distribution to creditors, with payments expected to begin around Sept. 30, according to a statement released on July 23. 

The window covers holders of allowed Class 5 Customer Entitlement Claims and Class 6 General Unsecured Claims under the confirmed plan, along with Convenience Claims that became allowed after earlier cutoffs and have not yet been paid.

Additional funds for upcoming round

The estate also received court approval to reduce its disputed claims reserve by $1.9 billion, bringing it from $6.5 billion to $ 4.6 billion. The move frees additional cash for the upcoming round, which BitGo, Kraken, and Payoneer will administer. 

According to the statement, only creditors who have cleared all pre-distribution requirements will receive funds.

FTX reminded claimants that once the estate transfers money to their chosen provider, account access and support fall to that platform. Creditors must finish Know Your Customer checks, submit tax forms, and complete onboarding before disbursements are made.

Transfers of claims remain subject to strict timing. Distributions will flow only to transferees whose assignments are processed and reflected on the official claims register by the August 15 record date, after the 21-day objection period expires without challenge. 

Continuing the payouts

The schedule marks the latest major payout milestone since the exchange collapsed in late 2022, and follows months of reconciliation, asset sales, and litigation over who is owed what. 

On May 30, creditors received nearly $5 billion in repayments, marking the second round of repayments that began on February 18. 

The round addressed creditors with claims valued at $50,000 or less, with 9% annual interest accrued since the bankruptcy filing in November 2022

The statement highlighted that the FTX Trust does not require potential creditors to connect wallets to verify eligibility or receive reimbursements.

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Chinese creditors affected by FTX’s latest legal maneuver are ramping up efforts to challenge the bankrupt exchange’s request to delay payouts to users in 49 jurisdictions with restrictive or uncertain crypto laws.

The group is turning to US courts and regulators, raising concerns about fairness, transparency, and procedural integrity.

Speaking with CryptoSlate, a Chinese creditor named Will has retained a US attorney and is part of a growing community of over 500 Chinese creditors organizing their response against FTX’s decision.

He revealed that dozens of affected users have already sent formal objections to the bankruptcy court. “So far, 35 people from our group have mailed letters to the judge,” he said on X.

He told CryptoSlate:

“I’m working closely with a growing group of Chinese creditors—now over 500 members—many of whom are taking coordinated actions such as writing letters to the judge and US Trustee, and exploring group legal representation.”

According to him, their frustration centers around a recent FTX motion asking the court for permission to hold back $470 million in distributions to creditors in countries with ambiguous crypto rules. China accounts for the majority of this amount, with $380 million in claims, or roughly 82% of the restricted total.

Will, however, stressed that:

“$470 million is not just a cold number — behind it are countless families already hurt once. A second wound is unfolding. We can’t stay silent.”

Concerns over fairness

Speaking on behalf of the Chinese creditors, Will argues that FTX’s move contradicts earlier assurances.

He told CryptoSlate:

“We were told clearly: as long as we submitted our claims and voted in favor of the plan, we would be entitled to receive our distributions like everyone else. Based on that understanding, we cooperated, our claims were verified, and we supported the reorganization plan in good faith.”

He argues that this reversal erodes trust in the process. FTX’s new legal move could deny them their rightful compensation because of their “nationality or perceived legal uncertainty.”

He said:

“This situation is not only unfair—it’s procedurally questionable. A confirmed plan should not be altered in a way that selectively strips rights from certain creditors after the fact. We believe such changes, especially those targeting a group of people based solely on jurisdiction, deserve close scrutiny from the court.”

FTX claims it is trying to avoid legal risk by not sending funds to countries where crypto use may be restricted.

However, critics see this as a dangerous precedent that could selectively undermine the rights of verified claimants after a reorganization plan has already been confirmed.

He concluded:

“At the end of the day, this is not just about money—it’s about fairness, credibility, and trust in the system. We are not asking for special treatment; we are asking to be treated equally under the same rules as everyone else. A confirmed distribution process should not be altered at the last stage to selectively exclude those who have already done everything required of them.”

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Crypto Journalist

Amin Ayan

Crypto Journalist

Amin Ayan

About Author

Amin Ayan is a crypto journalist with over four years of experience in the industry. He has contributed to leading publications such as Cryptonews, Investing.com, 99Bitcoins, and 24/7 Wall St. He has…

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Last updated: 

May 30, 2025

The FTX Recovery Trust has launched a second wave of payments to creditors, marking a major milestone in the collapsed exchange’s ongoing reimbursement process.

On May 30, the Trust began distributing $5 billion to eligible creditors who completed pre-distribution requirements, targeting both the Convenience and Non-Convenience Classes.

The move follows a May 28 announcement detailing how the funds would be allocated across various claim types.

FTX Creditors Set to Receive Up to 72% Payout in Latest Round

Under the plan, Dotcom Customer Entitlement Claims are set to receive a 72% distribution, while US Customer Entitlement Claims will see a 54% payout.

Convenience Claims will receive a full 120% reimbursement. General Unsecured Claims and Digital Asset Loan Claims are scheduled for a 61% distribution.

Payments are being processed through official distribution partners Kraken and BitGo, with recipients expected to receive funds within one to two business days.

The FTX reimbursements are being closely watched by crypto investors, as large liquidity injections from these payouts could impact digital asset markets.

Analysts warn that if recipients choose to offload or swap their recovered funds on retail exchanges, it could introduce short-term price volatility.

This is the second major disbursement since FTX’s collapse. The first round of payments, totaling $1.2 billion, was distributed on February 18 to claimants with less than $50,000 in approved claims.

The reimbursement process has not been without controversy.

In September 2024, FTX creditor Sunil Kavuri highlighted that claim values were being calculated based on prices at the time of the bankruptcy filing — during the depths of the crypto winter — rather than current market values.

As a result, many creditors are recovering just 10% to 25% of their crypto holdings’ actual value.

Kavuri has also raised concerns about global fairness, noting that creditors in 163 countries, including Egypt, Iran, Russia, Greenland, and Pakistan, remain ineligible for payouts.

Sam Bankman-Fried’s Release Date Set for 2044

FTX founder Sam Bankman-Fried is now projected to be released from federal prison on December 14, 2044, after serving less than 21 years of his 25-year sentence for fraud tied to the FTX collapse.

He was also fined over $11 billion. Federal records confirm that Bankman-Fried has been moved from New York to a transfer facility in Oklahoma following nearly two years behind bars.

The move comes after Bankman-Fried was reportedly placed in solitary confinement earlier this month for giving an unauthorized interview to Tucker Carlson.

His incarceration began in August 2023, after Judge Lewis Kaplan revoked his bail due to allegations of witness tampering involving leaked diary entries from former Alameda CEO Caroline Ellison, who was a key witness in the case.

Bankrupt FTX has received court approval to reject creditor claims from users who failed to begin the Know Your Customer (KYC) process before March 3, 2025.

The April 2 court filing includes 2,378 pages of invalidated claims, representing around 500,000 entries. The court order clearly disallows any claim listed that is not backed by KYC compliance.

According to the filing:

“In accordance with the Order, each claim set forth on Exhibit A attached hereto has been expunged and disallowed in its entirety.”

FTX creditors were previously advised to complete KYC steps to retain eligibility for payouts.

Sunil Kavuri, a known activist for the creditor community, stated on social media that more claims will be removed after June 1 if required documentation remains missing.

He added that the exchange could disqualify up to $655 million in claims under $50,000 and around $1.9 billion in more significant claims if users fail to submit KYC documents.

Another FTX creditor advocate, who goes by the alias “Mr Purple,” shared a slightly different perspective. He noted that out of 457,000 smaller claims, the estimated value stood at $344 million. Based on updated figures, he believes FTX’s total liabilities may drop by roughly $300 million.

FTX bankruptcy process

This update comes just weeks before FTX begins processing repayments for claims exceeding $50,000, scheduled to start on May 30.

The move marks a significant step forward in the lengthy and contentious bankruptcy case that began in November 2022.

Meanwhile, creditors with smaller claims, labeled “convenience claims” by the estate, have already received payments in February.

Backpack, the exchange that acquired FTX’s European unit, has also begun assisting affected users. Former FTX EU customers have been asked to create accounts, submit KYC documents, and link their old claim data to the new platform.

However, the platform has yet to provide a timeline for when it would begin the repayment.

Despite these developments, creditors in countries like China, Russia, Egypt, Nigeria, and Ukraine remain excluded from all distributions.

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