Key Takeaways
- FTX withdrew its motion to restrict repayments in 49 jurisdictions.
- Nearly $800 million in claims—mostly from China—were at stake.
- Creditors’ objections likely influenced the decision.
- The withdrawal leaves room for future re-filing by the FTX estate.
FTX Pulls Back on Restrictive Repayment Plan
Collapsed crypto exchange FTX has withdrawn its controversial motion that sought to limit customer repayments in several restricted jurisdictions, including China, Russia, and Ukraine. The reversal marks a significant win for creditors worried about losing claims worth hundreds of millions of dollars.
Also Read: First Digital Trust Scandal Is Worse Than FTX
The motion, part of FTX’s ongoing Chapter 11 bankruptcy proceedings, aimed to establish a “Restricted Jurisdiction Procedure” to evaluate repayment feasibility in 49 countries where regulatory hurdles could delay or block payouts. These included China, Pakistan, and Saudi Arabia—together accounting for nearly $800 million, or 5% of FTX’s $16 billion in potential distributions.
Creditor Pushback Leads to Withdrawal
FTX’s plan would have allowed the estate to forfeit customer claims in countries deemed too difficult for compliant repayment. Under the proposed procedure, claims in restricted areas could have been seized and redistributed after a 45-day objection window.
The move drew immediate backlash, particularly from a coalition of 300 Chinese creditors led by Weiwei Ji, who filed an objection in Delaware’s bankruptcy court. Ji argued that there was “no factual or legal basis” for classifying China as restricted, noting that Chinese creditors already suffered significant losses from the exchange’s collapse.
Facing mounting opposition, FTX withdrew the motion without prejudice—meaning it may refile at a later date, potentially reigniting debate among global claimants.
Also Read: FTX Alameda Unstakes $31.5M in Solana (SOL), Raising Sell-Off Fears and Market Volatility Risks
Legal Turmoil Around Sam Bankman-Fried
The withdrawal coincides with renewed attention on Sam Bankman-Fried, FTX’s convicted founder, who is set to appear for an appeal hearing in New York. Recently, a document surfaced from Bankman-Fried claiming that FTX and Alameda Research were “never insolvent,” accusing bankruptcy counsel of mishandling the process and undervaluing assets.
Bankman-Fried’s defense team and family continue to insist on his innocence, even appealing for presidential clemency from Donald Trump—who has previously pardoned figures like Ross Ulbricht and Changpeng Zhao.
FTX’s decision to retract its restricted jurisdiction motion reflects growing pressure from international creditors and the complex legal landscape surrounding its bankruptcy. While the move temporarily protects claimants in affected regions, it also signals ongoing uncertainty in one of crypto’s most consequential insolvency cases.
