The downfall of cryptocurrency exchange FTX in 2022 led to the establishment of the FTX Recovery Trust, tasked with liquidating assets to repay debts under judicial scrutiny. Recently, the Trust has faced new obstacles as it seeks to settle outstanding claims. Filed in the Delaware Bankruptcy Court, the Trust’s latest update reveals an expansion of its list of restricted nations to include China, Russia, and 47 other countries, potentially complicating payments. About 5% of the anticipated $16 billion in claims originate from these countries, with China alone accounting for a sizable 82% of that segment. The court is set to deliberate on these developments on July 22.
What is the Trust’s Next Step?
The Trust plans to work with local law firms in the identified jurisdictions to determine the viability of executing payments. A positive local legal assessment would allow continued transactions using services such as Payoneer. Conversely, a negative outcome would lead to the formal designation of these regions as “restricted” under the court’s terms.
How Can Creditors Respond?
Creditors in these newly restricted areas have the right to challenge this designation. A written objection can be submitted within a 45-day window. Without this submission, creditors risk losing their claims, which will be redirected to the Trust for redistribution.
The notification confirms that payments will be withdrawn in jurisdictions where regulations prevent them. While using Payoneer has increased payout possibilities in 93 countries, some creditors remain dissatisfied, particularly on the X platform, due to this expansion’s limitations.
One Chinese creditor has announced intentions to contest the ruling process and is encouraging peers to advocate for their claims.
The Trust’s petition is set to be addressed by Judge John Dorsey on July 22. If approved, the measures will be enacted promptly, ushering in a vital phase of the repayment strategy.
Decisions made during this period will have notable implications:
- China dominates with 82% of claims in restricted areas.
- If claims are unpaid, creditors risk forfeiture.
- Local law barriers could retract claims entirely.
- Legal clarity may enable a country’s removal from the restricted list.
As developments unfold, those impacted by the proceedings must act quickly to defend their claims to avoid irrevocable losses. Meanwhile, the FTX Recovery Trust continues to navigate these international legal hurdles in a bid to settle its obligations.
