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A single missed deadline is now holding up one of the last contested motions in the FTX bankruptcy. Chief Judge Karen B. Owens is set to hear claimant Daizhuo Chen’s case on August 19, via Zoom, starting at 9:30 a.m. ET.
Chen filed his motion on March 27. He wants Judge Owens to reverse her earlier denial and accept his late verification. His legal team is leaning on Federal Rules of Civil Procedure 59(e) and 60(b)(2) — rules that let courts reopen decisions when new evidence surfaces. The problem? Owens hasn’t seen anything in the record that qualifies as new evidence here. The FTX Recovery Trust pushed back hard on July 16, opposing the request outright. It’s not the first time the Trust has said no to appeals like this. It’s basically their default position.
FTX’s verification deadlines were not soft suggestions.
Initial checks had to be done by March 1, 2025. Final verification closed June 1, 2025. Both cut off at exactly 4 p.m. ET. Miss either window and you’re out. The Trust, which runs the estate wind-down, has stuck to that line consistently, rejecting leniency requests across the board.
Who Else Got Caught Out
Chen isn’t alone. D1 Ventures has been trying to recover $251,000 in USDC and USDT since December 2022. They still haven’t cleared verification. Their motion got pushed with no new hearing date set. Two other suits are also sitting in limbo, pending alongside D1’s case. No resolution in sight on any of them.
The verification process itself is pretty demanding. Creditors have to pass Know Your Customer checks, file tax forms, and complete onboarding through one of three approved platforms — BitGo, Kraken, or Payoneer. Skip a step, miss a form, and the claim gets invalidated. The Trust has already wiped out a large number of customer claims this way. Unclear exactly how many, but the Trust says it’s significant.
Those who did finish the paperwork? They’ve done well, all things considered. The fourth repayment round, which closed March 31, paid convenience claims at 120 cents on the dollar. U.S. customer claims came in at 100%. Dotcom customer claims got 96%. And on July 31, the Trust distributed an additional $900 million — the smallest payout round yet, which probably means the estate is getting close to the end of what’s left to distribute.
The $600 Million Reserve Question
There’s still a contested-claims reserve sitting at $2.4 billion. The Trust wants to cut that down by $600 million, bringing it to $1.8 billion. Whether that happens depends partly on how Owens rules on Chen’s motion and cases like it. A decision in Chen’s favor could crack open the door for other late filers. A denial keeps the Trust’s hard line intact and probably speeds up the reserve reduction.
Owens is expected to rule quickly after the August 19 hearing. No drawn-out deliberation anticipated — she’ll likely have a decision ready that same day, which would give clarity to anyone still waiting on similar procedural appeals.
Ernst & Young filed its final fee application, which pretty much signals the administrative side of the FTX estate is winding down. Several orders have also been submitted without argument, another sign that the procedural loose ends are getting tied off. But with contested claims still unresolved, the reserve funds aren’t going anywhere just yet.
Sam Bankman-Fried’s situation is separate from all of this. His conviction and sentencing went through the appeal process in the Second Circuit, and that chapter is closed. The August 19 hearing has nothing to do with him — it’s purely about verification disputes and what happens to creditors who didn’t follow the process.
The gap between creditors who completed verification and those who didn’t is getting starker by the week. Successful claimants already have their money. Some got more than they originally expected, given the 120% payout rate on convenience claims. Meanwhile, people like Chen and D1 Ventures are still fighting for access to a process that, by the Trust’s reading, they already forfeited.
And the Trust isn’t softening. Every opposition filing, every rejected appeal, sends the same message: the deadlines were real, the platforms were available, and the window is shut.
D1 Ventures’ situation is worth watching separately. Three-plus years of trying to recover $251,000 in stablecoins, with no verified claim and no hearing date. That’s a long time to be in legal limbo over assets that, in dollar terms, aren’t enormous but matter to whoever is on the other end of that claim.
The Chen hearing is the last unresolved motion before Owens. After that, the path to closing out the FTX estate gets a lot shorter — at least on the judicial side. The reserve reduction, from $2.4 billion down to $1.8 billion, is the Trust’s next major target.
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Frequently Asked Questions
What is Daizhuo Chen asking for in the FTX bankruptcy hearing?
Chen filed a motion on March 27 asking Judge Karen B. Owens to reverse her denial and accept his late verification, citing Federal Rules of Civil Procedure 59(e) and 60(b)(2).
How much has FTX distributed to creditors so far, and at what rates?
As of the fourth repayment round on March 31, convenience claims were paid at 120%, U.S. customer claims at 100%, and dotcom customer claims at 96%, with an additional $900 million distributed on July 31.
Why It Matters
The outcome of this legal maneuver could have significant implications for the ongoing FTX bankruptcy proceedings, particularly as it pertains to the distribution of the $1.8 billion reserve. If Chen's motion is accepted, it may set a precedent for how late claims are handled in bankruptcy cases, potentially influencing other creditors' strategies and the overall timeline for final resolutions in the FTX estate. This situation underscores the complexities and legal intricacies that can arise in high-profile crypto bankruptcies, which continue to shape investor sentiment and regulatory scrutiny in the sector.
