Bankrupt crypto exchange FTX has filed a request with the court seeking approval for a plan that may deny billions in repayments to users from 49 countries subject to legal restrictions regarding cryptocurrency.
Legal Restrictions for Creditors
FTX is seeking to designate 49 countries, including China, Russia, Afghanistan, and Ukraine, as 'Potentially Restricted Jurisdictions.' Claims from these regions will be automatically treated as 'disputed.' The FTX Trust plans to first seek legal opinions for each jurisdiction, and in cases where distribution is deemed legally permissible, payouts will proceed. However, if legal advice indicates that distributing funds would violate local laws, the Trust will issue a formal notice to affected creditors and provide them with a chance to file a formal objection.
User Discussions and Reactions
The proposal has sparked significant backlash among users. Some users argue that this approach is unfair, claiming FTX accepted users from China when it was permitted. One user on X stated, 'FTX accepted users from China when things were fine, now denying their claims entirely feels unfair.' Another user voiced their discontent, arguing that the ability to hold cryptocurrency overseas should allow for payouts.
Ongoing Payments to Other Creditors
Meanwhile, other creditors have begun receiving their payouts. According to a July 1 update, those with claims under $50,000 have received 120% payouts, while larger claimants received 72.5% in May. The remaining 27.5% is expected to be distributed over the next few years until 2027.
FTX continues to face legal and ethical questions during its bankruptcy process, raising serious concerns among users in restricted jurisdictions. Ongoing discussions and analyses of these issues are expected to persist.
