FTX Recovery Trust Halts Payouts to 49 Nations—China Left Holding the Bag as Legal Gridlock Deepens

Another day, another crypto freeze—this time it’s FTX’s recovery trust slamming the brakes on payouts to nearly 50 countries. Legal red tape strikes again.

China takes the biggest hit. No surprises there—when crypto and regulators collide, someone’s always left holding the bag. Meanwhile, lawyers rack up billable hours.

When will funds flow? Your guess is as good as ours. But hey, at least the trust is doing its due diligence—or just buying time while the crypto world moves on.

Pro tip: If you’re waiting for a payout, maybe don’t hold your breath. The wheels of justice grind slow, especially when billions are on the line.

Objections

Creditors who object must submit a sworn statement accepting the jurisdiction of the US court. 

During the objection period, the trust will suspend all distributions linked to the challenged claim. If the dispute remains unresolved on a distribution record date, the withheld amount and any accrued interest revert to the estate.

If a creditor files a timely objection, the trust must seek a court ruling on whether its determination of restricted jurisdiction is reasonable. 

The filing warns that failure to object will cause an automatic forfeiture once the objection deadline passes. Creditors who lose the dispute face the same outcome. 

The trust defines service of notice as complete once mail or email reaches the last address on file, referring to the effort as “commercially reasonable.”

China holds most of the frozen value

Kavuri said that the 49 jurisdictions represent about 5% of allowed claims, but 82% of their dollar value sits in China. 

The creditor advocate summarized the trust’s playbook. The process involves obtaining a legal opinion on each jurisdiction, distributing it where feasible, and formally disputing claims when residence in a blocked market is confirmed. 

The filing mirrors that outline, stating that claims will remain “Disputed Claims until the status of the Potentially Restricted Foreign Jurisdiction is resolved and the Claim is otherwise Allowed or disallowed.”