FTX Recovery Trust proposes to block repayments in 49 ‘at risk’ countries, including China, Russia, Pakistan, and Ukraine, for legal and regulatory reasons.
Up to $800 million could be reclassified as ‘disputed claims’ if creditors do not challenge their status within 45 days.
The measure has sparked strong opposition, especially in China, where thousands of creditors threaten to challenge the procedure before the July 22 hearing.
Jusqu’à 800 millions $ en jeu pour les créanciers des zones à risque
It’s another blow for thousands of FTX creditors. The FTX Recovery Trust, tasked with distributing the recovered $16 billion, has just filed an explosive proposition: freezing repayments in 49 ‘restricted’ jurisdictions. In clear terms, if you are based in China, Russia, Pakistan, or even Ukraine, you might just never see your money.
In focus: countries where international fund transfers are regulated, even prohibited. China alone holds 82% of the value of claims from these sensitive zones, according to documents filed Wednesday. In total, nearly $800 million could be frozen if the court approves this measure.
Une procédure opaque… et radicale
The plan, dubbed ‘Restricted Jurisdiction Procedures,’ involves hiring local lawyers to assess the legal feasibility of distributions. If conditions are met, funds will be disbursed via providers like Payoneer. Otherwise? Assets will simply be confiscated.
Affected creditors will receive a notice and have 45 days to contest their country’s designation as a ‘restricted jurisdiction.’ After this period, or if their objection is rejected by the court, their funds will be reverted to the Trust’s treasury, considered ‘disputed claims.’
A decision with far-reaching consequences, which could lead to a redistribution of confiscated amounts to creditors from authorized countries. In other words, one’s loss could be another’s gain.
La colère monte en Chine
On X (formerly Twitter), the backlash was swift. Several Chinese users, FTX creditors, have announced their intention to challenge every step of the procedure:
This digital revolt underscores the extreme tension surrounding the FTX case. In June, the Trust had tried to reassure by expanding the distribution provider list to 93 jurisdictions, with Payoneer bolstering. However, many countries remain excluded, fueling the frustration of thousands of victims.
Verdict attendu le 22 juillet
The final decision now rests with the court. A hearing is scheduled for July 22. If the plan is approved, the Trust will immediately kickstart the process: hiring lawyers, notifying creditors, handling objections… and potentially redistributing unclaimed amounts.
Simultaneously, the Trust aims to minimize this blacklist, if the legal situation in certain countries changes. A statement to be taken cautiously, given the deep regulatory hurdles in several concerned states.
