FTX Recovery Trust Moves to Withhold $500 Million From China, Crypto-Banned Nations

The FTX Recovery Trust asked the Delaware bankruptcy court to approve a new “hold-and-review” framework that could block payments to customers in 49 jurisdictions where cryptocurrency use is banned or heavily restricted, according to a filing made public this week. The list covers markets such as China, Russia, Ukraine, Pakistan and Saudi Arabia.

The trust said the targeted countries account for about 5% of roughly $16 billion in potential creditor claims, yet more than 82% of the disputed dollar value—around $435 million—belongs to Chinese residents. In total, the proposed rule would freeze over $500 million in distributions until local legal opinions confirm that transfers would not violate domestic regulations.

Under the plan, each claimant in a restricted jurisdiction would receive a notice explaining the designation and have at least 45 days to object by submitting sworn statements accepting U.S. court jurisdiction. Claims left unresolved by the objection deadline would be forfeited, with the withheld funds reverting to the bankruptcy estate.

The motion underscores the legal and regulatory complications that continue to slow efforts to repay FTX’s global customer base nearly three years after the exchange’s November 2022 collapse. Chief restructuring officer John J. Ray III has already overseen more than $5 billion in initial distributions and is preparing additional rounds, but says compliance with foreign crypto rules remains a major hurdle.

This is an AI-generated article powered by DeepNewz, curated by The Defiant. For more information, including article sources, visit DeepNewz.