The FTX creditor community is awaiting a court ruling on a motion that could lead to freezing payouts in 'restricted countries' including China. The issue has garnered numerous objections from creditors.
Potential Consequences of the Court Ruling
It is expected that on Tuesday, the US Bankruptcy Court in Delaware will rule on a motion that could allow FTX to withhold payouts to creditors in 49 countries. If approved, the implications may threaten trust in the global crypto ecosystem, according to creditor Weiwei Ji.
Creditors' Objections
Since FTX filed for a freeze on payouts, around 40 objections have been recorded, with many coming from Chinese creditors, who represent over half of the total submissions. Critics, such as Faisal Saad Almutairi from Saudi Arabia, have also voiced their concerns.
Impact on FTX Creditor Claims
The news regarding the FTX motion has triggered price volatility in creditor claims. Claims from 'restricted jurisdictions' have fallen by 20-30%, according to information from the platform Paxtibi. It is estimated that over $5.8 billion in FTX claims have been sold by clients to specialized funds, which also reflects current market conditions.
The situation surrounding FTX's request to freeze payouts to creditors from certain countries raises significant questions about the legal basis and processes in bankruptcy cases, which may have lasting effects on future bankruptcy cases in the crypto industry.
