Weiwei Ji, a creditor from China residing in Singapore, has filed an objection against FTX's motion to suspend payments to clients in jurisdictions with restrictive cryptocurrency regulations. This was disclosed in a recent court filing.
Chinese Creditor's Position
Weiwei Ji argues that he has been misclassified as a Chinese creditor solely due to holding a Chinese passport. In the objection, he noted that he represents a growing group of over 300 Chinese creditors. Ji emphasized that FTX settlements are made in US dollars, which is a standard legal repayment method. He also pointed out that cryptocurrency distributions are legal in China, categorizing digital assets as 'personal property'.
"My family holds four KYC-verified accounts with aggregate claims exceeding $15 million USD… We have fully complied with every procedural requirement under the Plan. The proposed motion now jeopardizes our right to distribution in an arbitrary and inequitable manner," Ji states in the document.
FTX's Motion and Its Justifications
On July 2, FTX filed a motion to pause payouts to residents of restricted countries, stating that distributions to jurisdictions in violation of legal restrictions could incur fines, penalties, and even criminal liability for its directors and officers.
The motion identified 49 countries with unclear or restrictive crypto regulations, including, besides China, Russia, Egypt, Afghanistan, Tunisia, Zimbabwe, Ukraine, and Moldova. FTX cited Moldova as an example in its filing, indicating that engaging in operations regarding virtual assets is considered a criminal offense.
Consequences for Creditors
From February 18, 2023, FTX began repayments, starting with members in a so-called 'convenience class'. The repayment amounts were based on the value of digital assets at the time of the exchange's collapse in November 2022, a policy that has frustrated some creditors, especially those living in restricted jurisdictions.
Weiwei Ji's case raises critical questions about the legal aspects of cryptocurrency distributions in countries with strict regulations. The unfolding of the situation will depend on future courtroom decisions and actions taken by FTX.
