FTX Recovery Trust has filed a notice with the U.S. Bankruptcy Court for the District of Delaware seeking to reduce its disputed claims reserve by $1.93 billion, citing significant progress in claims reconciliation efforts. The proposed reduction would lower the reserve from $6.533 billion to $4.599 billion, freeing up substantial assets for potential distribution to creditors.
In a declaration filed on June 27, 2025, Steven P. Coverick, Managing Director at Alvarez & Marsal North America, LLC, outlined the extensive claims reconciliation work that has led to this proposed adjustment. Since establishing the original reserve amount, the FTX Recovery Trust has reconciled approximately $8.3 billion in claims and filed 186 omnibus claims objections targeting over 36,400 asserted claims valued at more than $27 quintillion.
"The FTX Recovery Trust's reconciliation process is significant and remains ongoing," Coverick stated in his declaration. The Trust determined the revised reserve amount after a rigorous analysis of debtors' books and records, scheduled claims, filed proofs of claim, communications with claimants, and legal considerations.
The reduction reflects a net decrease of approximately $1.79 billion in disputed claims, with $1.85 billion becoming allowed claims through reconciliation, settlement and Know Your Customer (KYC) verification. Additionally, approximately $1.41 billion of disputed claims have been expunged or modified through various processes, including:
- $950 million through settlements, omnibus objection orders, and reserve reductions
- $100 million through claim negotiations
- $360 million related to expungements due to missed KYC deadlines
These reductions were partially offset by approximately $1.47 billion in new disputed claims, including $470 million related to holders potentially subject to sanctions or residing in jurisdictions with cryptocurrency restrictions, $290 million primarily from claims in The Bahamas where parties failed to complete KYC requirements, and $660 million flagged for potential litigation.
"The Revised Reserve Amount is based on intentionally conservative assumptions, and includes approximately $1.9 billion of remaining Disputed Claims over and above the amounts that the FTX Recovery Trust project will ultimately become Allowed Claims," Coverick explained in his declaration.
Despite the substantial reduction, the Trust is maintaining approximately $350 million in contingency funds to protect claims that are unliquidated or included at less than the full asserted amount, though this represents a $150 million reduction from the original $500 million contingency.
The FTX bankruptcy case (Case No. 22-11068) has been one of the largest and most complex cryptocurrency industry failures in history. The exchange, once valued at $32 billion, collapsed in November 2022 amid liquidity issues and allegations of misused customer funds. Former CEO Sam Bankman-Fried was subsequently convicted on fraud charges.
According to the notice, objections to the proposed reduction must be filed within 14 days. If no timely objections are received, the FTX Recovery Trust will submit a "Certificate of No Objection" requesting court approval of the revised reserve amount.
The FTX Recovery Trust is represented by Landis Rath & Cobb LLP in Wilmington, Delaware, and Sullivan & Cromwell LLP in New York.
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