What happened?
The FTX bankruptcy management company proposed a motion to suspend payments to residents of 49 countries with regulatory restrictions or unclear regulations on cryptocurrency, including China. Among them, claims from Chinese creditors amount to as much as $380 million. This move immediately triggered strong dissatisfaction among Chinese creditors, and over 500 people have gathered to form a self-rescue alliance, actively seeking legal means to defend their rights.
Chinese creditors raised two main core arguments against FTX's motion. First, they emphasized that FTX's final payment is in USD cash, which is a legal tender compensation and should not be subject to cryptocurrency regulatory restrictions. Second, they pointed out that Chinese law recognizes digital assets as "personal property," and although there are regulations on trading, legally held digital assets are still protected. Therefore, FTX should not use this as a reason to refuse or delay compensation.
Chinese creditors believe that FTX's actions are not just about money but more deeply about "fairness, credibility, and trust in the system." They stated that creditors have completed all procedures as required and supported the restructuring plan, yet FTX, at the last moment, selectively deprived them of their rights due to nationality or regional legal issues, which is not only unfair but also undermines the confirmed repayment process, causing severe damage to trust in the entire legal and financial system.
Chinese creditors collectively voice their opposition: over 500 people jointly object
The FTX bankruptcy management company (FTX Estate) recently filed a motion to suspend payments to residents of 49 jurisdictions that have legal or regulatory restrictions on cryptocurrency trading, involving funds amounting to $470 million. However, Chinese creditors alone account for $380 million, raising dissatisfaction and concerns among the vast number of Chinese creditors.
According to the latest court documents and reports from foreign media, in response to the FTX bankruptcy management company's attempt to suspend payments to creditors in specific regions, a large-scale self-rescue operation by Chinese creditors is underway.
Now, more than 500 Chinese creditors have formed an alliance, with 35 of them having formally submitted written objections to the court. They are actively seeking assistance from U.S. lawyers through various channels, including formally protesting to the courts and regulatory authorities, to defend their rightful claims.
Among them, a Chinese creditor named Weiwei Ji currently resides in Singapore but is classified as a Chinese creditor due to holding a Chinese passport, and has recently formally submitted his objection.
The two main arguments against the motion
Weiwei's objections mainly focus on two points:
1. FTX compensation paid in USD:
Weiwei pointed out that the payments ultimately made to creditors after FTX liquidation will be in USD cash, not in any form of cryptocurrency. Since this is the repayment of legal tender, FTX should not refuse or suspend payments to Chinese creditors on the grounds of China's regulations on cryptocurrency trading or usage.
In simple terms, this money is standard legal tender compensation, not involving any "distribution" or "trading" of cryptocurrency, so it should not be subject to regulatory restrictions on cryptocurrency in various countries.
2. Legitimacy of digital assets in China:
Weiwei emphasized that even in China, although there are strict regulations on the trading and issuance of cryptocurrency, Chinese law recognizes digital assets (including cryptocurrencies) as having the legal status of "personal property."
In other words, although trading or issuing cannot be done arbitrarily, personally legally held digital assets are protected by law. Therefore, even if FTX ultimately involves the process of converting digital assets into USD payments, this should not constitute a reason to hinder payments to Chinese creditors, as their digital assets are legally personal property in China.
Weiwei earnestly stated in the documents: "My family holds four KYC-verified accounts, with a total claim amount exceeding $15 million... We have fully complied with every procedural requirement under the plan. This proposed motion now endangers our distribution rights in an arbitrary and unfair manner."
Details and implications of the FTX bankruptcy management company's motion
The FTX bankruptcy management company submitted a motion on July 2 to suspend payments to residents of restricted countries. The reason given was that distributing payments to these countries might violate local laws, resulting in fines, including personal liability for directors and executives, and even criminal penalties, including imprisonment.
The motion named 49 countries with unclear or restrictive laws on cryptocurrency, believing that these regions may pose risks due to complex cross-border legal issues.
It is reported that approximately 5% of all approved claims belong to residents of these restricted jurisdictions. In addition to China, the list includes countries such as Russia, Egypt, Afghanistan, Tunisia, Zimbabwe, Ukraine, and Moldova.
In the motion, the FTX bankruptcy management company cited Moldova as an example, pointing out that "providing virtual asset services" in that country is even a criminal offense.
Notably, among the $470 million in payments FTX plans to suspend, claims from Chinese creditors amount to as much as $380 million, accounting for about 82% of the total.
Creditors' concerns: Breach of commitment and procedural fairness
Chinese creditor Will expressed deep concerns about fairness on behalf of the affected group. He stated that FTX's actions contradict prior commitments.
He told foreign media (cryptoslate): "We were clearly informed: as long as we submitted our claims and voted in support of the plan, we would be entitled to receive our distribution just like everyone else. Based on this understanding, we cooperated, our claims were verified, and we sincerely supported the restructuring plan."
Will emphasized that FTX's new legal action could deprive creditors of their legitimate compensation due to their "nationality or perceived legal uncertainty," which is not only unfair but also raises procedural questions.
He believes: "A confirmed plan should not be modified in a way that selectively deprives certain creditors of their rights. We believe that such changes, especially those targeting a specific group of jurisdictions, should be closely scrutinized by the court."
Although FTX claims it is afraid of violating local laws, opponents believe that this is essentially FTX shirking responsibility, and it will cause great harm to those creditors who would otherwise receive their payments, undermining the fairness of the entire repayment process.
"This is not just about money," Will summarized, "it is about fairness, credibility, and trust in the system. We are not asking for special treatment; we are asking for equal treatment under the same rules as everyone else. A confirmed distribution process should not be modified at the final stage to selectively exclude those who have fulfilled all the requirements."
References: cointelegraph, cryptoslate
