FTX Petitions Court for Special Claims Process in 49 Countries with Crypto Restrictions

FTX has requested that a bankruptcy court approve a new process for handling claims of creditors residing in 49 countries potentially subject to restrictions

The defunct exchange had requested permission earlier this week in a motion filed in the Delaware Bankruptcy Court. Notably, Sunil Kavuri, a top representative of FTX’s creditors, called the public’s attention to the development, which he tagged as ‘disputed claims.’

FTX Recovery Trust warned that it may face obstacles in disbursing funds to creditors residing in 49 countries. Some of these countries either prohibit crypto trading or restrict distribution. These countries include China, Russia, Ukraine, North Korea, Cameroon, and Pakistan

China Accounts for 82% of Disputed Claims

Notably, around 82% of all disputed claims are linked to creditors residing in China, according to Kavuri. China has been clamping down on crypto-related activities long before the FTX debacle in late 2022. Although FTX was not legally permitted to operate in China, residents still gained access to the platform via VPNs

However, FTX creditors based in China and 48 other countries now face major hurdles in recovering their claims due to the restrictions. In light of the circumstances, the FTX Recovery Trust has requested that the Bankruptcy Court approve a special plan to handle claims from users in these countries

Next Steps

If approved, the Trust will seek legal counsel to determine whether it can proceed legally with the payouts in the affected jurisdictions. Kavuri emphasized that if the legal opinion is affirmative, the Trust will pay the eligible claimants in the affected countries accordingly

However, if the opinion confirms that the claimants reside in a region where crypto trading activity is prohibited, the claim will be tagged as ‘disputed.’

In this scenario, unsatisfied claimants can file an objection to prevent the outright forfeiture of the claim. The creditor representative stated that if the dispute is not resolved, the claimant will forfeit distributions and accrued interest

FTX Repayments

Meanwhile, FTX has been making efforts to compensate investors under the court-approved reorganization plan. Despite the plan becoming effective in January 2025, the FTX Trust commenced repayment on February 18, 2025. It initially prioritized creditors whose claims were not up to $50,000, distributing 120% of their original claim value

Three months later, precisely on May 30, the Trust commenced payouts to creditors with claims exceeding $50,000. The payout, which lasted three business days, resulted in creditors receiving only 72.5% of their original claim value

FTX remains committed to fully compensating these creditors. The defunct exchange has scheduled the next repayment of the outstanding 27.5% of major claims for sometime around Q4 2025, 2026, or 2027