Thousands of former clients of the collapsed exchange FTX may lose their claims—especially those from China. Legal barriers linked to crypto bans in certain regions are threatening potential payouts, with a striking 82% of all restricted jurisdiction claims coming from Chinese users.

To address this, FTX has filed a motion with the U.S. bankruptcy court, requesting approval for a new process to handle claims from 49 “restricted jurisdictions.” Under the proposed system, claims would only be honored if legal representatives confirm that payouts are lawful under local regulations. If not, these claims may be disputed—or outright denied.

FTX is currently handling claims from users in 49 jurisdictions where crypto is either heavily restricted or outright banned. Although these regions account for only 5% of total allowed claims, a massive 82% of them originate from China, where crypto trading has been officially banned since 2021.

In May, FTX entered its second repayment phase and distributed $5 billion to creditors. Now, the platform faces the challenge of dealing with claims from countries where cross-border payouts may not be legally permitted.

If lawyers confirm that payouts do not violate local law, FTX will proceed. However, if a claimant remains in a banned jurisdiction, the claim may be formally challenged and potentially voided. Those affected may lose their right to any distribution entirely.

Chinese creditors are responding—and they're not backing down. Many are reaching out to lawyers and preparing legal challenges against claim rejections.

One user, known as Will, posted:

“I’ve contacted my attorney in New York and await her response. I will file objections at every stage. While mainland China bans crypto trading, citizens can still hold digital assets. The law recognizes them as commodities.”

He also questioned why payouts—processed in USD—are being blocked for Chinese residents, even though they're legally allowed to hold foreign currency abroad.

🧾 A Way Out? Selling or Transferring Claims to Another Jurisdiction

Another creditor asked if there's any alternative. Well-known FTX creditor advocate Sunil replied:

“Unfortunately, it looks like they've made their decision. In the worst-case scenario, claimants can sell or transfer their claims to a permitted jurisdiction.”

This may not only affect users in China, but also those in other regions deemed problematic by FTX due to legal uncertainties.




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