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FTX Bankruptcy May Exclude Users in 49 Regions, Most Claims from China

FTX Bankruptcy May Exclude Users in 49 Regions, Most Claims from China

CryptotaleCryptotale2025/07/04 09:00
By:Meiazagan
FTX Bankruptcy May Exclude Users in 49 Regions, Most Claims from China image 0
  • FTX froze payouts in 49 areas where crypto laws block legal fund transfers.
  • China holds the largest share of frozen claims, with over 82 percent of the total.
  • Creditors must object within 45 days or risk automatic forfeiture of their claims.

The FTX Recovery Trust has paused payouts in 49 countries due to legal barriers and will resume distributions once the necessary approvals are obtained. The affected jurisdictions include China, Nigeria, Fiji, and Zimbabwe.

Although these regions account for only 5% of total allowed claims, China alone holds 82% of the frozen claim value. FTX faces legal uncertainty in these areas due to local restrictions, raising concerns about the legality of fund distribution to residents.

Disputed Claims Now on Hold

FTX has implemented a hold-and-review process for all impacted claims, categorizing them as contentious until legal guidance is issued. These claims will remain on hold until legal advisers confirm compliance with local laws and formal approval is granted.

FTX: Restricted countries
Disputed claims

49 Jurisdictions -5% allowed claims in restricted countries 82% of value in China

Due to local laws that 1) crypto currency trading is not permitted or 2) distributors not allowed pic.twitter.com/wCEfAOFyaD

— Sunil (FTX Creditor Champion) (@sunil_trades) July 3, 2025

Creditors will receive a “Restricted Jurisdiction Notice” explaining the reason for the dispute. They will have at least 45 days to file an objection. Those who do not respond by the deadline will forfeit their claims automatically. Notice is deemed delivered once sent to the last known address or email.

Court Filing Details Objection Path

To file an objection, creditors must submit a sworn statement accepting the jurisdiction of U.S. courts. The court will then decide whether restricting payouts to certain countries by the trust is reasonable and legally justified. Any related accusations will be paused until a final ruling is made. If a claim is not accepted by the record date, the associated proceeds will revert to the estate.

The procedure aims to prevent any violations in the jurisdiction, which has strict rules regarding crypto. The trust will outline payments as it obtains legal opinions in every instance. This is done to ensure the distributions are legal in all concerned countries. Until then, we will not release these funds.

Creditor Response and Claim Transfers

Some creditors have criticized the restrictions. Even users who moved to crypto-friendly jurisdictions have to wait in line to receive payouts. There are doubts about whether claims may be transferred or sold to users in unregulated jurisdictions. The trust has not given any advice that supports this move.

Related: FTX Will Begin $5B Repayment Round to Users Starting May 30 

One Chinese creditor has announced plans to challenge the move in court. He claims that holding crypto and U.S. dollars is not illegal in China. He also questions why payouts cannot be sent via wire transfer. He has encouraged others to object to the restriction.

The trust has reduced disputed claims from $6.5 billion to $4.6 billion. Approximately $1.8 billion in claims were recently approved. Another $2.7 billion in claims are expected to be approved soon. Approved claims now total $8.3 billion, bringing partial relief to creditors.

The post FTX Bankruptcy May Exclude Users in 49 Regions, Most Claims from China appeared first on Cryptotale.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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