Judge Owens to Rule on FTT Claimant's Missed KYC Deadline at Aug. 19 Hearing

FTT News

The FTX bankruptcy estate behind the collapsed exchange’s native FTX Token (FTT) is down to its final courtroom confrontation. Chief Judge Karen B. Owens is scheduled to hear the only remaining customer motion at a 9:30 a.m. ET Zoom hearing on Wednesday, Aug. 19, and she is expected to rule from the bench. The contested request comes from claimant Daizhuo Chen, who filed his motion on March 27 asking the judge to reverse her refusal to let him complete verification late. Chen points to Federal Rules of Civil Procedure 59(e) and 60(b)(2), which let a court reopen a decision when fresh evidence appears; Owens has not indicated that any exists here. The docket lays out a strict timetable — FTX told customers to begin verification by March 1, 2025 and finish by June 1, 2025, with both deadlines closing at 4 p.m. ET. The FTX Recovery Trust, the entity now liquidating the estate, filed another objection on July 16 and has fought similar requests before. Verification is the gate to payment: claimants must pass know-your-customer (KYC) checks, submit tax forms and onboard with BitGo, Kraken or Payoneer. The Trust has said hundreds of thousands of customer claims have already been thrown out for failing those checks. Fail any step and the allocation is lost. The agenda filed Monday places Chen’s motion as the sole customer dispute on the calendar. The court confirmed in June that Sam Bankman-Fried has no role in this phase; his conviction and 25-year sentence were upheld, and the appeal mandate issued in August ended his case at the Second Circuit. With Ernst & Young’s final fee application already on file and counsel expected to submit uncontested orders without argument, the altcoin estate is visibly winding down. The judge’s ruling will signal how much leeway remains for late filers.

The repayment record shows what a completed form is worth. Verified creditors have recovered their claims in full, and several classes received more: convenience claims were repaid at 120%, U.S. customer claims at 100%, general unsecured claims at 100%, and Dotcom customer claims at 96%. Those totals run through the fourth distribution round on March 31, which sent out about $2.2 billion, followed by roughly $900 million on July 31 in the smallest FTX distribution so far. Money is still being held back for disputed claims, and the Trust wants that contested-claims reserve cut by $600 million, bringing it from $2.4 billion down to $1.8 billion. Chen is not the only claimant caught in the verification net. D1 Ventures has pursued a $251,000 claim composed of USDC and USDT since December 2022, and the Trust says that account never passed verification either; that motion was adjourned again without a new date, while two other suits were also postponed, leaving both open. Those unresolved creditors remain in limbo while the estate moves toward closure. The Trust has consistently opposed requests like Chen’s, and its July 16 objection fits that pattern. The July 31 payment, roughly $900 million, was the smallest distribution so far, another sign that much of the estate’s repayment work is already complete. The gap between verified and unverified claimants is stark. Unlike a conventional airdrop, the FTX process does not simply credit tokens to any wallet — it requires KYC clearance, tax documentation and custody onboarding before a distribution is released. The long tail of the bear market is visible in this docket, and each adjournment pushes unresolved claims further down the queue. The judge’s rationale will reach well beyond Chen, since every rejected claimant will look for a path to reopen.

The legal posture is now a question of procedure rather than recovery value. The motion before Chief Judge Owens invokes Rules 59(e) and 60(b)(2), the federal mechanisms for reopening a decision after the fact, and the court’s own docket shows the estate preparing to close — Ernst & Young has filed its final fee application and uncontested orders are set to be submitted without argument. No holding has been issued yet; the motion is set for oral argument on Wednesday. Our reading of the filing is that the judge’s ruling on Chen’s motion will set the outer limit of post-deadline flexibility for every claimant still locked out. The ruling will not change the established recovery percentages, but it will determine who is eligible to receive them. For FTT holders, the practical question is no longer the token’s all-time high but whether a claim can survive the estate’s final administrative sweep. That makes Wednesday’s Zoom hearing less a battle over assets than a ruling on how much paperwork leniency remains in a bankruptcy process that has already paid out billions.