Written by: Golem (@web3_golem)

On July 1, FTX creditor representative Sunil published an update on the debt compensation situation:

  • On February 18, 2025, the compensation ratio for users with amounts less than $50,000 will be 120%;

  • On May 30, 2025, users with amounts exceeding $50,000 will receive a 72.5% compensation, while those with amounts less than $50,000 will have a compensation ratio of 120%;

  • The expected compensation distribution times in the future are: October and December 2026, and 2027;

  • Users whose amounts exceed $50,000 and have already received a 72.5% payout will subsequently receive a 27.5% payout of the face value, achieving a total payout of 100%. (Note: Based on the compensation situation, the interest rate for FTX creditors after applying for compensation is about 40-80%.)

Just as the creditors were planning to wait patiently for the compensation to reach them, FTX's debt claims encountered another hiccup.

On July 4, FTX creditor representative Sunil posted on platform X stating that creditors from 49 jurisdictions, including China, may lose their claims rights. The claims funds from these areas account for 5% of the total funds, approximately valued at $825 million (based on a total compensation asset of $16.5 billion), of which 82% belongs to Chinese creditors, with claim assets valued at approximately $676.5 million.

List of jurisdictions that may not be able to obtain claims

At the same time, Sunil stated that FTX will seek legal advice to distribute to restricted foreign jurisdictions. However, if it is determined that the user belongs to a restricted foreign jurisdiction, the claim will be disputed, and users have 45 days to raise objections. If the issue is not resolved, users will completely lose their allocation rights, and their compensation shares will be confiscated and returned to the FTX liquidation trust for distribution to legitimate creditors in other countries.

In fact, when FTX officially started compensating users with amounts less than $50,000 on February 18, it indicated that users from five regions—China, Russia, Egypt, Nigeria, and Ukraine—were temporarily unable to participate in the claims distribution, among which Chinese users account for the largest number, making up 8% of FTX's total user base.

At that time, the affected users might have thought that the restriction on claims was temporary and that FTX could propose solutions in the future, but the news announced today expanded the areas where claims are restricted, and the wording is almost a death sentence for the claims of creditors in restricted areas.

In response to FTX's actions, the anger of the affected users can no longer be suppressed. User @zhetengji stated that they have contacted a lawyer in New York and called for more people to take action:

I will definitely take action and raise objections at every stage. I also hope that more people can stand up. We cannot just sit and wait—this is absolutely unreasonable. Although mainland China does not support cryptocurrency trading, mainland residents are allowed to hold cryptocurrencies. The law recognizes the commodity nature of virtual currencies. The claims process is settled in dollars. Although foreign exchange controls limit the amount of dollars that mainland residents can receive each year, they are allowed to hold dollars abroad.

How should Chinese creditors collect debts?

Using legal means must also consider costs and benefits. For large creditors who have suffered losses of tens to hundreds of millions of dollars in FTX, the costs and benefits of taking legal action may be equivalent; but for users with amounts less than $50,000, the claim funds are not worth the cost, time, and effort spent on legal avenues.

So should we just watch our money flow into someone else's pocket? Of course not. In fact, there are already many third-party platforms on the market providing debt sale services for FTX creditors, such as RootData, claims market, ftxcreditor, and Xclaim. To better understand how FTX Chinese creditors can 'collect debts,' Odaily reached out to Loners Liu, the head of RootData's FTX creditor solutions, to learn more about the situation:

RootData's main business is a financing information platform, and it also provides debt sale services for Chinese users of FTX. It has successfully handled over 1,000 cases, assisting in processing debts exceeding $300 million. Loners Liu stated: ‘You can think of us as an intermediary like Lianjia; we help Chinese creditors sell debts at a discount (one-time sale, not in batches, etc.), or we can also help them hold their debts.’

RootData currently charges a service fee of 1-2% for this service, and it offers the following four main solutions for helping Chinese users handle FTX debts:

  • Sell the debt;

  • Transfer the debt to entities outside of China;

  • Transfer the debt in the name of trustees, banks, or other entities outside of China;

  • Change of residence;

If it is a debt sale, the first step is to log into claims.ftx.com to confirm KYC approval, then both parties need to schedule a video meeting, log into the backend for verification, sign the contract, and finally complete the transfer.

‘Previously, some people were hesitating whether to actively handle their debts, but after the news broke these days about the restriction on FTX debt claims for Chinese users, many have come to inquire.’ Loners Liu answered my questions while responding to consultation messages from creditors.

‘However, based on our estimates, there may be only a little over 1,000 users among Chinese creditors whose amounts exceed $50,000,’ Loners Liu stated that in reality, many large clients have already processed their debts through various channels.

From the perspective of the affected users, waiting for years without receiving money is akin to a bolt from the blue. The 45-day appeal period given by the creditor representatives, combined with the cross-border claim rights and their frustrating working efficiency, deals a heavy blow. At this moment, being able to incur a certain loss (bond transfer rate + a small handling fee) to achieve partial fund recovery can be considered a good solution under the circumstances.

However, if one insists on legal principles and strictly defends their rights, facing bankruptcy lawyer teams that charge exorbitant fees and hold the discourse power of the rules, Chinese creditors indeed have nowhere to leverage. In the rapidly changing and tumultuous world of cryptocurrency, the FTX explosion case seems distant now, but the scars left on all parties involved have yet to heal. The most unbearable scene is seeing the cryptocurrency that once carried wealth dreams ultimately turn into dollars lining the pockets of legal teams.