FTX Suspends Claims in 49 Jurisdictions, China Creditors Face 82% of Disputed Value

On July 3, 2025, the FTX Recovery Trust halted claim distributions for creditors in 49 “Potentially Restricted Foreign Jurisdictions,” according to court filing Doc 31148-3 (Case 22-11068-KBO), submitted on July 2.

The list includes countries such as Afghanistan, China, Nigeria, Fiji, and Zimbabwe, where local laws either ban cryptocurrency trading or restrict distribution agents. This affects 5% of allowed claims, with 82% of the disputed value concentrated in China, posing a significant challenge for affected creditors.

These claims are labeled as “Disputed Claims” pending legal clearance. Creditors will receive a 'Restricted Jurisdiction Notice' and will have 45 days to object; otherwise, they risk forfeiting their claims. Kroll Restructuring Administration LLC (“Claims Agent”) will notify creditors via mail to their last known addresses using commercially reasonable efforts.

If a creditor’s residency in a restricted jurisdiction is confirmed and their objection remains unresolved, distributions will be withheld until a court either validates the trust’s decision or confirms the restriction status. Missing the objection deadline may lead to immediate forfeiture.

Sunil Kavuri, an FTX creditor advocate, emphasized China’s outsized impact. He noted that many relocated users still face claim restrictions despite moving to crypto-friendly jurisdictions.

He proposed that creditors could “sell or transfer the claim to collect in an allowed jurisdiction,” though this option remains legally untested. In the meantime, creditor-led legal challenges are gaining momentum.

FTX Repayment Moves Forward Despite Obstacles

Despite the restrictions, FTX has advanced its repayment efforts. The trust reported a drop in disputed claims from $6.5 billion to $4.6 billion, with $1.8 billion previously contested now approved and $2.7 billion expected to clear soon.

Backed by $14.7 billion to $16.5 billion in recovered assets, the trust has approved claims totaling $8.3 billion. In early 2025, $1.2 billion was distributed to creditors with claims under $50,000, with the next round set for May 30, 2025, for higher claims. The aim is to repay 98% of creditors 119% of their allowed claims from November 2022, though the 49 jurisdictions present ongoing hurdles.

Community Reactions

The decision has sparked outrage on X, with many users labeling it a blatant act of theft.

Amid this backlash, one creditor, @zhetengji, is taking a stand, vowing to fight for justice. He stated, “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. While mainland China does not support cryptocurrency trading, residents of mainland China are allowed to hold cryptocurrencies. The law recognizes the commodity attributes of virtual currencies. The claims process uses USD for settlement. Although foreign exchange controls limit the amount of USD that mainland Chinese residents can receive annually, they are allowed to hold USD overseas. So why isn’t wire transfer settlement supported?”. His comprehensive response reflects a determined effort to seek redress.

@Vida_BWE echoed similar concerns, posting, “At least FTX should allow Chinese users change KYC or sell their claims to other foreign entity, some people already become a resident of a different jurisdiction where crypto is legal but still cannot claim”, urging for more flexible solutions.

Ultimately, the assets deposited with FTX were the community’s funds, accepted without restriction at the time, yet the platform’s inflexible stance post-bankruptcy risks inflicting a second blow on users who once trusted it. A resolution depends on FTX’s willingness to address these growing legal and community concerns — or risk further eroding public trust.