American court hearing recordings and interviews - Listen to the 8/19/26 FTX bankruptcy court ruling re FTX customer payouts & KYC. #Crypto

Episode Date: August 20, 2026

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Good morning, everyone. This is Judge Owens. We're gathered for the omnibus hearing in FTX. There's only one matter going forward today after reviewing the agenda, which is Mr. Chen's motion, and I am prepared. I took it under advisement at the last hearing, and I am prepared to rule on it. I'll just pause before I roll to ask the parties if there's anything that we should discuss before I go into my ruling. And if not, I will, I'm happy to rule. Mr. Gluckstein, I see you're joining us. Hi, good morning, Your Honor, and thank you very much for doing this virtually this morning. No, we don't, as it correctly reflected on the agenda, we don't have any other matters going forward this morning.

Okay, well, then I'm happy to roll, and I will go ahead and do so. I see Mr. Chen is joining us. Thank you very much. In June of 2023, the court entered an order establishing the deadline for customers to file proofs of claim and submit all required know-your-c customer or K-Y-C information. In September of 2023, Mr. Chen uploaded the documents in an attempt to satisfy the KYC process. The debtors then made a determination that the documents were insufficient. Notices were given to Mr. Chen to finish the KYC process, to which he did not respond.

In February 2025, after notice and a hearing, the court granted the trust's request to set a deadline by which customer claimant's KYC information was to be submitted. That deadline was June 1st, 2025. If the information was not timely submitted, the claims were ordered to be disallowed and expunged. In July 2025, after the June 1st deadline passed, the trust filed a notice of disallowment and expungement to address the over 47,000 customer claimants who did not fulfill the KYC requirements by the court-ordered deadline. Mr. Chen and his claim were included in this notice. Months later, Mr. Chen requested that this court extend the June 1st KYC submission deadline under Bankruptcy Rule 9,06, or alternatively, that it reconsidered the disallowance of his claim

under Section 502J of the Bankruptcy Code, both under the excusable neglect standard. To support his request, Mr. Chen acknowledged that he had received notices of the incomplete KYC process prior to the submission deadline, but did not respond due to his concern that the notices were fishing attempts. At the hearing, Mr. Chen argued that he had adequately completed the KYC process when he submitted his documents to the trust in September of 2023. The court ultimately denied the relief requested. With respect to the latter argument, the court held that it was not raised in the briefing and lacked evidentiary support. The court ruled on the matter at the omnibus hearing held in November of 2025, and so ordered the record. Mr. Chen now seeks reconsideration of the November 2025 ruling and order under the federal rules of civil procedure 59 and 60B2,

made applicable through bankruptcy rules 9023 and 9024, respectively. The trust opposes the motion. After considering the motion to reconsider and the trust's objection, I've determined to deny the motion. Under Bankruptcy Rule 9023, a motion for a new trial or to alter or amend a judgment under Rule 59 must be filed within 14 days after the entry of the judgment. The current motion was filed well beyond this deadline and therefore is untimely under that rule. With respect to 60, with respect to the Rule 60B2 relief, Mr. Chen claims that there is, quote,

newly discovered evidence that his KYC documents are in the trust's possession, and the KYC incomplete designation contradicts the trust's own records, end quote. More specifically following the November ruling, Mr. Chen requested his September 2023 KY submission documents from the trust via the FTX privacy team. He received those documents promptly and now asserts that they are newly discovered evidence supporting reconsideration of his claim allowance, arguing that they prove he timely submitted and complied with the KYC requirements. A court will reconsider a disallowed claim under 502J or grant similar relief under Rule 60B2

if there is newly discovered evidence that with reasonable diligence could not have been discovered in time to move for a new trial under Rule 59. Newly discovered evidence must exist at the time of the hearing and the move. must be excusably ignorant of the evidence. It is the movement's burden to show that these requirements are met. Once the movement shows that there is newly discovered evidence, he must show the evidence is material and not merely cumulative, could not have been discovered prior to trial through the exercise of reasonable diligence,

and would probably have changed the outcome of the trial. Mr. Chen has known what documents he submitted to the trust for the KYC requirement, since he submitted them in September of 2023. The fact that he received the documents back from the trust upon his request after the court's November 2025 rolling cannot, therefore, establish newly discovered evidence to support a reconsideration of the court's claim disallowance. Said a different way, there has been no explanation of how Mr. Chen was excusably ignorant of what he uploaded to the trust for the KYC process. The documents could have been submitted to this court by Mr. Chen to timely support a Rule 59 motion to challenge the disallowance of his claim for failure to complete the KYC process, but they were not. Moreover, there is no evidence that the documents in the possession of the trust could not have been timely obtained to challenge the disallowance. The trust responded quickly to Mr. Chen's request for the documents, and there is no evidence to conclude that reasonable diligence would not have allowed Mr. Chen to receive the documents held by the trust.

in time necessary to challenge the disallowance in the first instance or to seek relief under Rule 59. Accordingly, the motion will be denied, and I will enter an order on the docket following today's hearing. Thank you very much for your time and attention to this matter. With nothing else to discuss, I will adjourn the hearing, and I will see you most likely next month. Thank you very much. Thank you, Your Honor.