FTX Faces Creditor Backlash Over $470M Repayment Freeze, Seeks Court Delay

FTX's bankruptcy estate has requested a delay in a crucial court hearing due to mounting objections from creditors over its plan to suspend $470 million in repayments. The exchange's proposal specifically targets creditors in regions with restrictive or unclear crypto regulations, such as China, Russia, and Egypt. FTX cites significant legal risks as the primary reason for the freeze, warning of potential complications arising from regulatory uncertainties in these jurisdictions. The court's decision on this matter could have far-reaching implications for the handling of crypto-related bankruptcies and creditor repayments in the future.

FTX Seeks Court Delay Amid Creditor Backlash Over $470M Repayment Freeze

FTX's bankruptcy estate has requested a Delaware court to postpone a crucial hearing, citing the need to address over 90 objections to its proposed suspension of $470 million in creditor repayments. The contested plan specifically targets creditors in jurisdictions with restrictive or unclear cryptocurrency regulations, including China, Russia, and Egypt.

Legal risks dominate the exchange's argument. FTX warns that processing payments in these regions could trigger regulatory violations, potentially jeopardizing the entire restructuring process. Sunday's filing emphasizes the complexity of responding to creditor concerns, requesting additional time to craft detailed rebuttals.

Unsecured creditors face existential uncertainty. Several objections highlight fears that approved claims might be reduced to zero if the freeze is implemented, particularly for claimants in sanctioned territories. The estate maintains the pause is necessary to prevent potential clawbacks from hostile regulators.

Corporate Demand Persists — Why the Dip Is Temporary

Corporate and institutional buying continues unabated despite recent market weakness, signaling underlying strength in digital asset adoption. The persistence of demand from sophisticated investors suggests the current price correction may be short-lived.

FTX's announcement of creditor repayments resuming September 30 brings renewed focus to exchange solvency issues, though market impact appears contained. ETF flows remain mixed for the third consecutive day, reflecting investor indecision amid volatile conditions.

Altcoins are leading the market correction, with solana bearing the brunt of the sell-off. The disproportionate pressure on SOL highlights the riskier nature of altcoin investments during periods of market stress.