FTX Recovery Trust submitted a motion to the U.S. Bankruptcy Court on Wednesday, requesting authorization to implement a special distribution mechanism for 'restricted jurisdictions.' If approved by the court, creditors from 49 countries, including China and Russia, may not be able to smoothly reclaim their owed funds.
According to court documents submitted on Wednesday, these 49 countries listed as 'potential restricted areas' include China, Russia, Ukraine, Pakistan, and Saudi Arabia, with the involved claims amounting to about 5% of the overall claim scale of $16 billion. Notably, Chinese creditors account for as much as 82%.
The document mentions that the so-called 'Restricted Jurisdiction Procedures' will be evaluated by local legal advisors appointed by the trustee to assess the legal environment of each country and determine whether funds can be distributed in compliance with regulations.
Once compliance and feasibility are confirmed, the trustee will appoint an authorized third-party platform to distribute the funds; if compliance cannot be guaranteed, a request will be made to the court to list it as a 'restricted area' and notify local creditors.
After creditors receive the notice, they will have 45 days to raise objections; if no one objects after the deadline or if the objection is rejected, the funds allocated to creditors in 'restricted areas' will be confiscated and returned to the trust asset pool for redistribution. The claims from these jurisdictions will be treated as disputed claims until resolved.
The document states: 'If local legal restrictions prevent lawful compensation distribution, the relevant assets will not be distributed and will revert to the FTX Recovery Trust.'
However, the document also emphasizes that the trustee will continue to work to reduce the list of restricted areas, and if the legal environment clarifies in the future, there may still be a chance to reopen compensation.
The court is expected to hold a hearing on July 22 to review the motion. If approved, FTX will proceed to hire lawyers, notify creditors, and address objections one by one, while continuing to advance the global creditor settlement process.
However, the news has already caused some dissatisfaction among users. A creditor claiming to be a Chinese user on the social platform X, @zhetengji, posted:
I will definitely take action and raise objections at each stage. I also hope more people will speak out; this practice is completely unacceptable.
To strengthen the global compensation mechanism, the FTX bankruptcy reorganization trust added Payoneer last month as the third distribution platform, which currently supports fund distribution to 93 countries worldwide, but many users still complain that their countries are not on the list, and compensation remains uncertain.
"FTX ignites controversy again! Creditors from China, Russia, and other '49 countries' may not receive compensation." This article was first published on (Blockchain News).
