FTX Takes Major Steps to Handle Disputed Claims from Restricted Jurisdictions
In a significant legal development, FTX is striving for court approval to contest claims originating from 49 jurisdictions deemed restricted. This complex situation is particularly notable because a staggering 82% of the total claim value comes from Chinese users, who represent only 5% of the claims allowed in these territories. This maneuver adds another layer of complexity for creditors from regions where cryptocurrency trading faces strict legal constraints or where FTX failed to secure the appropriate distribution licenses.
As highlighted by Sunil, a prominent FTX Creditor Activist, the FTX Recovery Trust is committed to treating any claims from foreign jurisdictions with potential restrictions as disputed. This approach will remain in place until legal opinions clarify the feasibility of their distribution.
FTX: Restricted countries Disputed claims 49 Jurisdictions -5% allowed claims in restricted countries 82% of value in China Due to local laws that 1) crypto currency trading is not permitted or 2) distributors not allowed pic.twitter.com/wCEfAOFyaD— Sunil (FTX Creditor Champion) (@sunil_trades) July 3, 2025
Source: Sunil on X (Twitter)
Understanding the Implications for Creditors
The move by FTX introduces a new barrier for creditors in regions like China, Russia, Iran, and North Korea—countries where local laws either outlaw cryptocurrency trading or where FTX operated outside the confines of legal distribution. Under the proposed framework, creditors from these jurisdictions will be given a 45-day notice period to contest their designation as restricted. Failure to respond in time could mean losing their right to distribution entirely.
Compounding this situation, the Trust will require affected creditors to submit sworn statements waiving service of process and acknowledging jurisdiction in U.S. courts for any objections raised. Such requirements could severely delay or even negate payouts for numerous creditors who have been waiting over two years since FTX’s notorious collapse in November 2022.
Chinese Creditors Take Action Amidst Legal Challenges
Meanwhile, creditors from China are not sitting idle. Many are actively pursuing legal challenges against FTX’s designation of restricted jurisdictions. They argue that while cryptocurrency trading is not officially endorsed in China, the Chinese legal framework acknowledges the commodity attributes of digital currencies, allowing residents to hold such assets legally.
One concerned creditor noted, “Despite local laws against trading, we can legally hold cryptocurrencies. Why aren’t wire transfer settlements being authorized given these legal allowances?” Such sentiments highlight the frustration among affected users who are determined to ensure their rights are acknowledged.
I’ve already contacted my lawyer in New York and am waiting for her response. I will definitely take action and will raise objections at every stage. I also hope more people will step up. We can’t just sit and wait—this is absolutely unreasonable. — Will的折腾纪 (@zhetengji) July 3, 2025
Navigating the Maze of Recovery
The intricacies of the claims process have turned FTX’s attempts at recovery into a chaotic series of events. The company has already distributed a total of $6.2 billion in two major rounds; the most recent distribution in May 2025 alone accounted for $5 billion paid to eligible creditors. However, creditors from restricted jurisdictions find themselves sidelined, unable to access these funds due to their unique legal surroundings.
During the first round of distributions, convenience class creditors with claims under $50,000 received $1.2 billion, while larger claims were prioritized in the subsequent payments. While the distribution percentages for various claims have generally been promising, such as 72% for Dotcom Customer Claims, creditors from restricted areas remain excluded from benefiting from these payouts.
The Ongoing Legal Battle & Future of FTX
On the legal front, FTX has successfully countered a massive $1.5 billion claim from the defunct hedge fund Three Arrows Capital (3AC). FTX’s legal team argued that the hedge fund faced losses due to flawed trading strategies rather than any mismanagement by the exchange itself. This highlights the ongoing struggles linked to FTX’s spectacular downfall and the web of claims that continue to unfold.
❌ @FTX_Official’s legal team is pushing back against a $1.5 billion claim from defunct hedge fund Three Arrows Capital (3AC), calling it baseless.#FTX #3AC https://t.co/WBTcGD1NEJ— Cryptonews.com (@cryptonews) June 23, 2025
As for FTX’s former CEO, Sam Bankman-Fried, he remains in prison until December 2044, serving a 25-year sentence for his role in the scandal. As legal proceedings continue to evolve, many high-profile endorsers, including basketball legend Shaquille O’Neal, have settled but others like Tom Brady and Kevin O’Leary are still entangled in ongoing controversies surrounding FTX.
Conclusion: What Lies Ahead for Creditors?
The landscape for FTX creditors is becoming increasingly complex. With potential payouts now fraught with legal obstacles, many are left wondering how the future will unfold. For those impacted, now is a critical moment to engage with legal advisers and stay informed about any developments in this unfolding saga. The vast implications of these rulings could ripple across the cryptocurrency sector, raising questions about the security and regulation of digital assets worldwide.
As this situation develops, what are your thoughts? Will creditors find a way to overcome these hurdles, or is this just another example of the challenges facing cryptocurrency investors? Let us know in the comments below.