By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX’s Bahamian subsidiary has yet to pay some $290m in previously-approved creditor claims because it has yet to be supplied with the necessary Know Your Customer (KYC) verification.

Steven P. Coverick, managing director at Alvarez & Marsal North America, a restructuring advisor to the now-renamed FTX Recovery Trust after it emerged from Chapter 11 bankruptcy protection, revealed that a sizeable proportion of creditor claims submitted in the FTX Digital Markets proceedings have yet to be paid because the Bahamian liquidators are still awaiting the required documentation.

He disclosed, in a June 27, 2025, affidavit filed with the Delaware Bankruptcy Court that “approximately $290m was previously considered to be allowed but became disputed claims primarily for failure to complete KYC in The Bahamas”.

Tribune Business subsequently verified that the $290m figure is accurate but this does not mean that these claims have been rejected by the FTX Digital Markets liquidator trio - Brian Simms KC, the Lennox Paton attorney and senior partner, and the PricewaterhouseCoopers (PwC) accounting duo of Kevin Cambridge and Peter Greaves.

Instead, this $290m is now sitting back in the claims reserve and will be processed once the creditors submit the necessary KYC verifications to prove their identity and that the relevant assets/monies claimed do indeed belong to them.

According to the FTX Digital Markets liquidators’ last report to the Supreme Court, which was submitted in November 2024, the trio had accepted 38,647 of the 41,264 creditor claims submitted in the Bahamian proceedings worth a collective $707.1m. The $290m figure means that 41 percent of that $707.1m has yet to be paid out and returned to creditors because of the KYC wait.

However, another way of looking at it is that close to 60 percent, and nearly two-thirds, of all approved claims in The Bahamas have been paid. The liquidators worked to pay smaller claims worth $50,000 and under first, and are now understood to be working their way through approving and verifying the larger institutional claims and creditors.

The Bahamian liquidator trio had warned of the KYC process’s importance in their last Supreme Court report. “Identity verification is required in all cases to ensure that distributions are only made to valid parties. Valid parties are those whose identities match the intended recipients, and where payments comply with relevant financial crime, regulatory and sanction requirements,” they warned.

“The joint official liquidators have set up KYC processing centres and have commenced conducting KYC, anti-money laundering and sanctions screening checks on all creditors confirmed as participating in The Bahamas process.

“The KYC standards applied by the joint official liquidators in the Bahamas process are substantially the same as those applied in the US process, although differences may arise in consideration of relevant regulatory standards in The Bahamas or elsewhere,” they added.

“Non-customer creditors will also be asked to verify their identities. For a claim to qualify as eligible for distribution, both the original claim beneficiary and the current beneficiary or claim owner (to the extent that claims were sold) must meet the relevant requirements....

“The joint official liquidators have adopted a ‘risk-based’ approach’ to the KYC in accordance with the relevant regulatory rules, and have established two levels of due diligence which are linked to the risk categorisation of the customer as determined upon receipt of the customer KYC information. The two levels of risk categorisation are ‘standard risk’ and ‘high risk’.”

FTX’s Bahamian liquidators further warned, during the second creditors meeting on March 12, 2025, at Baha Mar that “customers who fail to complete KYC risk forfeiting their claims. Unclaimed funds by the deadline will be redistributed among remaining customers”.....

“Despite being in liquidation, FTX Digital Markets adheres to a negotiated KYC policy established with the Securities Commission of the Bahamas,” they added. “KYC is a pre-requisite for payment to any creditor.

“Creditors fall into three categories: Those awaiting processing after providing KYC information, those yet to respond or submit required information, and those facing complexities due to claim nature or technical issues. Around 50 percent of customers have completed the process.”

The meeting minutes recorded: “From January 3, 2025, when the Chapter 11 plan of reorganisation became effective, FTX Digital Markets gained access to pooled assets valued at approximately $16bn.

“On February 18, 2025, distribution was paid to the customer claims of less than $50,000 - convenience class creditors - who had met the distribution requirements and have selected payment agents. The distribution represents 120.49 percent of their claim value.

“Distributions for all other creditors are scheduled to commence on May 30, 2025, provided that the distribution requirements have been satisfied. This will need to be completed by creditors in April to be eligible for the May distribution. Non-convenience class creditors will receive distributions in instalments over time.”

The FTX Digital Markets liquidators also confirmed that the collapsed crypto exchange’s Bahamian real estate portfolio, for which it paid around a collective $256m, was being placed on the market gradually to avoid over-saturation.

“The joint official liquidators are also in the process of realising the real estate portfolio of FTX Property Holdings in The Bahamas. Marketing of the properties commenced last year,” the trio added.

“Properties will be advertised and sold in a controlled manner to avoid market impact and work in consultation with the US debtors in this regard. The joint official liquidators have received significant interest in the properties to-date and are optimistic in achieving appropriate recoveries.”