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 former CEO of the crypto titan Binance is reportedly taking action to terminate the lawsuit filed by the bankruptcy estate of the collapsed digital asset exchange FTX.

In November, the FTX trust and FTX Digital Markets filed a suit against Binance, the exchange’s co-founder Changpeng Zhao and several other executives over a July 2021 share repurchase deal with FTX founder Sam Bankman-Fried.

Bloomberg reports that Zhao is now asking the US Bankruptcy Court for the District of Delaware to dismiss the claims seeking to claw back $1.76 billion that the trust and FTX Digital Markets say were improperly transferred by Bankman-Fried.

In a motion to dismiss filed on Monday, Zhao says the court does not have personal jurisdiction over him because of improper and ineffective service.

The motion argues that Zhao is a resident of the United Arab Emirates and, under the bankruptcy law, serving US counsel on a foreign defendant is improper and invalidates the complaint.

“The claims are so far removed from Delaware, and even the United States, that the statutes at issue, which lack extraterritorial application, do not even apply.”

The filing also says that the bankruptcy law does not definitively extend to foreign transfers, but the trust and FTX Digital Markets improperly attempt to extend their fraudulent transfer claims abroad.

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$1.9 billion in FTX repayments could soon enter the crypto market, providing a bullish outlook for crypto prices. This follows an announcement by the estate of the defunct exchange regarding the resolution of undisputed claims, clearing the way for the next repayments.  

The Market Awaits Next FTX Payouts Of $1.9 Billion

In a press release, FTX announced that it has received authority from the Bankruptcy Court to reduce the disputed claims reserve by $1.9 billion, providing a green light for the next repayments. The defunct exchange will release this cash for distribution to holders of allowed claims. This is bullish for the crypto market as these holders could inject this cash into crypto assets. 

According to the press release, the next distribution is expected to commence on or about September 30 later this year. Before then, the record date for the next distribution will be August 15 for holders of allowed claims. It is worth noting that this marks the third FTX repayment that the crypto market has witnessed.

The first FTX repayment of $1.2 billion was in February earlier this year, while the second was in May when the Bankruptcy Estate distributed $5 billion. This next distribution will be made by FTX’s Distribution Service Providers, including BitGo, Kraken, and Payoneer. Popular FTX creditor Sunil Kavuri also commented on this development. 

In an X post, Sunil stated that the distribution will be made to FTX claims that are above $50,000. Meanwhile, repayments will be made to claims below $50,000 that have been allowed since the record date. Class 6 General Unsecured Claims will also receive a portion of the $1.9 billion repayment. 

May Payout Coincides With Crypto Prices Rally

Notably, the May FTX repayment coincided with the crypto market rally that month, when the Bitcoin price reached a new all-time high (ATH), while altcoins also hit new local highs during that period. As such, this next payout could again spark another rally for the BTC and other digital assets. 

Moreover, the September repayment also coincides with when analysts like Titan of Crypto predict that Bitcoin could reach a new ATH. In an X post, Titan of Crypto shared an analysis that showed BTC could hit the $144,000 target in September. In the meantime, he suggested that a retest of the inverse Head-and-Shoulders pattern could happen before then. 

Meanwhile, the September FTX repayment would also coincide with the period when the Federal Reserve is meant to make its first rate cut this year, another bullish factor for the crypto market. As such, these developments could together spark a parabolic uptrend for the Bitcoin price and altcoins. Standard Chartered and Bitwise have both predicted that BTC could reach as high as $200,000 by the end of the year.

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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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