FTX Fights Back: Legal Firewall Blocks Claims from 49 Countries

FTX just drew a line in the sand—and it's wrapped in red tape.

The collapsed crypto giant is pushing back against creditors from nearly 50 nations, claiming jurisdictional hurdles make their claims invalid. Lawyers are calling it a 'sovereign immunity playbook' with a crypto twist.

Here's the kicker: while retail investors wait for scraps, the legal team's meter keeps running. Typical bankruptcy theater—where the only guaranteed winners wear suits.

TLDR

• FTX has asked the court to approve the treatment of claims from 49 jurisdictions as disputed.
• Chinese users represent 82% of the disputed claim value while making up only 5 percent of approved claims in those regions.
• Affected creditors will have 45 days to challenge their restricted status or lose all distribution rights.
• FTX argues that legal restrictions and licensing issues in certain countries create compliance risks.
• Chinese creditors are pursuing legal action and claim their laws permit crypto ownership and foreign USD holdings.

FTX has requested court approval to formally dispute creditor claims from 49 restricted jurisdictions, citing compliance risks. This decision could impact thousands of creditors in countries where FTX lacked operational licenses or where crypto trading faces legal barriers. Chinese users, although comprising only 5% of allowed claimants in these regions, represent 82% of the total disputed claim value.

The exchange’s proposed framework requires affected users to respond within 45 days or forfeit their rights to any distributions. FTX intends to treat these claims as disputed until legal opinions determine if funds can be legally distributed. The plan aims to minimize legal exposure while creditors from these jurisdictions face additional burdens.

FTX lawyers must also submit sworn statements accepting court jurisdiction and waiving formal service in each objection proceeding. This process introduces delays and legal complexities for creditors who have already waited since the exchange’s collapse in November 2022. These claimants now face greater hurdles due to local regulations and licensing gaps.

FTX Faces Pushback from Chinese Claimants

Chinese creditors are taking legal action to challenge their country’s inclusion on FTX’s restricted list. Many argue that China permits individuals to hold digital assets and transact in foreign currency under specific conditions. They also contend that the use of USD in FTX’s claim settlement process aligns with China’s legal framework.

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…

— Will的折腾纪 (@zhetengji) July 3, 2025

One claimant has retained a U.S.-based attorney to object at each procedural step in the court process. FTX’s plan, however, treats all affected creditors equally unless legal opinions validate exceptions. The Trust’s actions create uniform treatment, but this also overlooks unique legal environments in each nation.

China, despite banning crypto trading platforms, has not criminalized personal crypto ownership or USD holdings abroad. Claimants question why FTX will not support wire transfers, which could work within China’s current financial rules. They also highlight the commodity classification of crypto in mainland Chinese law to assert their eligibility.

Claims Process and Distribution Status

FTX has completed two major distribution rounds, releasing a total of $6.2 billion to eligible creditors. The first round targeted convenience claims under $50,000, while the second served larger account holders with significant recoveries. Due to compliance risks, these rounds did not include users from restricted territories.

Dotcom Customer Entitlement Claims received 72% of their balances, while U.S. claimants recovered 54% through available channels. General unsecured and digital loan claims saw a 61% distribution, and convenience claims received a full 120% payout including interest. FTX also added Payoneer as a third distribution partner alongside BitGo and Kraken.

Creditor distributions currently exclude restricted jurisdictions entirely, regardless of individual claim merits. FTX maintains that unresolved legal risks justify excluding these regions for now. The court must approve the framework before any claims from restricted areas can proceed.