FTX’s $4B Dilemma: Court Push for Chinese User Claims as 82% of Value Hangs in Balance

FTX just played its China card—and it's a whopper. The bankrupt exchange is scrambling to secure court approval for jurisdiction-specific claims, with over four-fifths of its value tied to users from the Middle Kingdom. Talk about putting all your renminbi in one basket.

The 82% China Factor

That's not a typo—Chinese accounts represent a staggering 82% of the claims value. While Western regulators were busy drafting sternly worded memos, Mainland traders apparently went all-in on FTX. Now the platform's lawyers are performing jurisdictional gymnastics to keep those claims from evaporating.

Legal Hail Mary

The filing reveals FTX's desperate bid to preserve value by ring-fencing Chinese claims. One bankruptcy attorney quipped, 'This isn't restructuring—it's triage.' Meanwhile, crypto Twitter's having a field day with the irony of decentralized finance's most centralized failure.

Finance's favorite circus continues—where else can you lose billions, blame jurisdiction, and still get a second act? At least the lawyers are getting paid in something more stable than FTT tokens.

The Trust must file sworn statements waiving service of process and submitting to court jurisdiction for any objections.

The development threatens to delay or eliminate payouts for thousands of creditors who have already waited over two years since FTX’s collapse in November 2022.

The exchange has distributed $6.2 billion across two major payment rounds, with the latest $5 billion distribution reaching eligible creditors in May 2025.

Chinese Creditors Face Legal Hurdles Despite Regulatory Clarity

Chinese creditors are mobilizing legal challenges against the restricted jurisdiction designation, arguing that mainland China recognizes the commodity attributes of cryptocurrency and permits its residents to hold digital assets.

One creditor contacted a New York lawyer to raise objections at every procedural stage.

“While mainland China does not support cryptocurrency trading, residents of mainland China are allowed to hold cryptocurrencies,” the creditor stated. “The law recognizes the commodity attributes of VIRTUAL currencies.“

The claims process uses USD for settlement, and Chinese residents can legally hold USD overseas despite foreign exchange controls limiting annual USD receipts.

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…

The FTX user further questions why wire transfer settlements aren’t supported given these legal frameworks.

FTX’s restricted jurisdiction list encompasses Afghanistan, Algeria, Belarus, Cambodia, Egypt, Libya, Myanmar, Pakistan, Syria, and Zimbabwe, among others.

The Trust argues local laws create compliance risks that justify the disputed claim treatment.

With this new development, creditors in these jurisdictions must demonstrate legal standing through sworn affidavits and subject themselves to the jurisdiction of U.S. courts.

The process requires significant legal resources that many individual creditors cannot afford.

Ongoing Distribution Challenges Complicate Recovery Process

FTX has distributed funds through two major rounds since beginning payouts in February 2025.

The first distribution totaled $1.2 billion for convenience class creditors with claims under $50,000, while the second distribution reached $5 billion for larger claimants.

FTX has announced that distribution of payments will resume on May 30, 2025. #FTX #FTXDistributionhttps://t.co/hnNZWkyMiE

Dotcom Customer Entitlement Claims received 72% distributions, while US Customer Entitlement Claims received 54% payouts.

General Unsecured Claims and Digital Asset Loan Claims both received 61% distributions. Convenience Claims received full 120% reimbursement, including 9% annual interest.

Moreover, the exchange added Payoneer as a third official distributor alongside BitGo and Kraken to expand payment accessibility across 93 jurisdictions.

However, creditors in restricted territories remain excluded from these distribution channels.

In a development surrounding the collapse of the crypto exchange, FTX lawyers successfully defended against Three Arrows Capital’s $1.5 billion claim, arguing the hedge fund’s losses resulted from failed trading strategies rather than improper liquidations.

@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 #3AChttps://t.co/WBTcGD1NEJ

The court filing dismissed 3AC’s claim as “baseless and rooted in the firm’s own trading missteps.”

Sam Bankman-Fried, the former CEO of FTX, remains imprisoned until December 2044 after receiving a 25-year sentence for fraud charges.

He was recently moved to an Oklahoma transfer facility following solitary confinement for an unauthorized interview.

However, for accomplices like Basketball legend Shaquille O’Neal, who settled his FTX promotional lawsuit for $1.8 million, becoming the first celebrity to finalize litigation tied to the exchange’s collapse.

Other celebrity endorsers, including Tom Brady and Kevin O’Leary, face ongoing legal challenges.