FTX Withdraws Motion That Could Have Blocked Repayments In 49 Countries
TLDR
- FTX withdrew its plan to limit creditor claims in 49 jurisdictions
- The motion would have affected $800M in claims, mostly from China
- Over 300 Chinese claimants formally objected to the proposed motion
- The withdrawal allows possible future refiling under court rules
FTX has withdrawn a proposal that could have denied repayment to customers in countries with regulatory restrictions. The collapsed exchange had asked the court to approve a plan that would review and possibly restrict creditor claims in 49 jurisdictions. The reversal follows strong objections from creditors, especially in China, where most affected claims originate.
Motion Withdrawn After Creditor Opposition
FTX, the bankrupt cryptocurrency exchange, has officially withdrawn a motion that aimed to create a process for limiting creditor repayments in countries considered legally or politically difficult. The filing was part of the broader Chapter 11 bankruptcy plan, and its purpose was to assess the risks of making distributions in jurisdictions with complex regulatory environments.
The proposed “Restricted Jurisdiction Procedure” included 49 countries, such as China, Russia, Ukraine, Pakistan, and Saudi Arabia. According to FTX, claims from these regions totaled about $800 million, or 5% of the estate’s estimated $16 billion in assets. Of that amount, China accounted for 82%.
FTX planned to hire local legal experts to determine if payouts could legally proceed in each jurisdiction. If not, the region would be labeled “restricted” after a 45-day objection period. Creditors in restricted countries would lose their claims, and the funds would be returned to the general estate.
However, the proposal received pushback. A group of more than 300 Chinese claimants, represented by creditor Weiwei Ji, filed an objection in U.S. Bankruptcy Court in Delaware. Ji, who is a Singapore tax resident but holds a Chinese passport, said there was no valid reason to treat China as a restricted country.
Withdrawal Made Without Prejudice
On Monday, FTX and its restructuring advisors withdrew the motion without prejudice. This means they retain the option to refile the same or a similar proposal in the future. The court was notified through proper legal channels, and any future attempt to revive the plan must follow due process, including advance notice to affected creditors.
The decision not to move forward with the restricted jurisdiction process, at least for now, removes a major concern for creditors in the listed countries. Many were concerned that the complexity of local laws might lead to forfeiture of valid claims.
The withdrawal also suggests that the estate may be reconsidering how best to handle international payouts. While compliance with local rules remains a challenge, FTX may now seek alternate ways to process distributions without risking widespread claim cancellations.
Bankman-Fried Claims FTX Was Solvent
The legal update comes just ahead of an appeal hearing for Sam Bankman-Fried, the former CEO of FTX. Convicted in 2023 on fraud and conspiracy charges, Bankman-Fried now argues that the company was not insolvent when it shut down.
Last week, he published a document dated October 2025 that claimed FTX and Alameda Research had sufficient assets to recover. He alleged that the company’s bankruptcy lawyers misrepresented its finances and rushed to liquidate its holdings. The document also claimed that the estate undervalued key assets and could have met all liabilities.
FTX filed for bankruptcy in November 2022 after internal dealings with sister firm Alameda Research triggered a liquidity crisis. Soon after, Bankman-Fried was arrested in the Bahamas and later extradited to the United States. His legal team continues to seek clemency from President Donald Trump.
Chinese Creditors Challenge Legal Grounds
Much of the pressure to withdraw the motion came from Chinese creditors. The objection filed by Weiwei Ji argued that there was no evidence to classify China as a jurisdiction where legal compliance was impossible. Ji’s filing pointed to successful legal actions in Chinese courts regarding foreign crypto platforms and asked the court not to penalize customers based solely on citizenship or passport.
The objection said: “FTX provided no factual basis for why China should be treated differently or why customer claims should be denied.”
The challenge also raised concerns about due process, suggesting that creditors would lose their rights without proper legal justification or recourse. This led the court to take a closer look at the fairness of the motion.
The post FTX Withdraws Motion That Could Have Blocked Repayments In 49 Countries appeared first on CoinCentral.
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