FTX has announced that it will begin its next round of creditor repayments, totalling $1.9 billion, starting 30 September. This marks the third major distribution of funds from the bankrupt crypto exchange, following previous payouts of $1.2 billion in February and $5 billion in May. The repayment will be made from funds no longer classified as disputed claims.

Third Distribution Set for Late September

According to a joint statement from the FTX Recovery Trust and FTX Trading, the upcoming payout will be made to creditors whose claims are considered allowed as of 15 August. The court recently authorised the FTX bankruptcy estate to reduce its disputed claims reserve from $6.5 billion to $4.3 billion, thereby freeing up $1.9 billion in cash for eligible creditors.

This third wave of distributions provides continued relief to many FTX victims, particularly those with claims exceeding $50,000, some of whom have already received partial payments in earlier rounds.

China and Other Jurisdictions Likely Excluded

Despite the sizeable payout, some creditors are expected to be left out. Around $4.3 billion worth of claims remain disputed, and many of these are linked to jurisdictions flagged in an earlier motion related to local legal restrictions.

FTX creditor Sunil Kavuri stated that this round of repayments will almost certainly exclude users in China and other regions categorised under “restricted jurisdictions.” He noted that the necessary procedures to approve these claims are still under revision and are unlikely to be completed by the record date.

Court Yet to Rule on Restricted Jurisdictions

On 22 July, a hearing was held to address FTX’s motion seeking to freeze payouts to creditors in 49 jurisdictions, citing potential breaches of local cryptocurrency laws. However, the court did not issue a formal ruling.

Instead, the judge approved FTX’s request for more time to respond to nearly 90 objections from affected creditors. The court directed the FTX estate to redraft the motion and provide a clearer framework for reclassifying jurisdictions from restricted to non-restricted.

According to creditor Weiwei Ji, who attended the hearing virtually, the court emphasised that the estate cannot seize creditors’ funds without offering a transparent and workable process. Ji added that the revised motion must outline a method by which affected creditors can challenge their classification and seek eligibility for future repayments.

Next Steps for Creditors and FTX Estate

With the 15 August deadline fast approaching, only those creditors whose claims are approved by that date will be included in the September payout. The fate of those in restricted regions remains uncertain until a new motion is submitted and approved.

The FTX estate continues to face pressure to resolve remaining disputes and expedite distributions, especially as the bankruptcy case progresses into its final phases. Creditors are closely watching for updates to the revised motion and any indication of when excluded jurisdictions might be reconsidered for repayment.