FTX Moves to Block Creditor Claims from 49 Countries, Sparking Global Backlash

Bankrupt cryptocurrency exchange FTX has stirred controversy with a recent court filing seeking to deny creditor repayments to users in 49 jurisdictions where cryptocurrency operations face legal restrictions. The proposal, submitted on July 2, 2025, could significantly impact users in China, who account for 82% of the affected claim value, alongside residents of Russia, Afghanistan, and Ukraine. The move has sparked widespread outcry among FTX users, particularly in these regions, as it designates them as "Potentially Restricted Jurisdictions" and could leave many without recourse for recovering their funds. This development highlights the ongoing challenges in the crypto industry's legal and regulatory landscape, especially for users in markets with strict digital asset policies. The court's decision on this matter could set a precedent for how bankrupt crypto platforms handle international creditor claims in the future.

FTX Seeks Court Approval to Block Claims from 49 Countries, Sparking User Outcry

Bankrupt cryptocurrency exchange FTX has filed a controversial proposal to deny creditor repayments to users in 49 jurisdictions where crypto faces legal restrictions. The move, detailed in a July 2 court filing, could disproportionately affect Chinese users—who represent 82% of the impacted claim value—alongside residents of Russia, Afghanistan, and Ukraine.

The plan designates these regions as "Potentially Restricted Jurisdictions," automatically flagging claims as disputed. FTX's Trust will first seek legal opinions for each territory. Where distributions are deemed permissible, payouts will proceed. However, creditors in prohibited jurisdictions face forfeiture of funds if they remain residents when repayments are processed, with assets reverting to the FTX Recovery Trust.

Affected users have 45 days to file objections after formal notification. The proposal has ignited fierce backlash, particularly among Chinese claimants who stand to lose billions collectively. Legal experts note the strategy reflects FTX's attempt to navigate complex cross-border regulatory minefields while minimizing liability.

FTX Faces Legal Risks Over Proposed Creditor Payout Freeze in 49 Jurisdictions

FTX's move to withhold distributions to creditors in 49 jurisdictions with restrictive crypto laws has sparked potential legal challenges, particularly from Chinese claimants. The exchange cited regulatory uncertainty and fears of fines or criminal liability as justification for the freeze.

A July 2 court filing revealed FTX's proposed 'hold-and-review' structure for affected assets, pending jurisdictional legal reviews. The decision highlights the growing tension between global bankruptcy proceedings and fragmented cryptocurrency regulations worldwide.