FTX Withdraws Plan Blocking Repayments to 49 Countries

• FTX withdraws plan blocking $800M in claims from 49 countries after creditor pushback.
• Global creditors win fairness as FTX reverses “Restricted Jurisdiction” motion.
• Move signals FTX’s effort to ease disputes while bankruptcy and appeal continue.

FTX has formally withdrawn a proposal that could have disqualified customers in nearly 50 countries, including China, from receiving repayments under its bankruptcy proceedings. The move came after strong objections from international creditor groups and affected claimants.

The FTX Recovery Trust filed a notice of withdrawal with the U.S. Bankruptcy Court in Delaware, removing the “Restricted Jurisdiction Procedure” motion that would have allowed the company to block payouts in countries where local laws or sanctions complicated repayment. The withdrawn plan had targeted about $800 million in claims from users across 49 jurisdictions.

Creditors and claimants, particularly from China, argued that the policy was discriminatory and would unfairly penalize users based solely on geography. The proposal faced immediate backlash from investors, prompting FTX to reverse course and maintain repayment eligibility for all affected users.

Creditor Pressure Prompts Major Policy Shift

According to court filings, FTX’s initial proposal aimed to simplify the repayment process by appointing legal counsel in each restricted country to assess the legality of returning funds. If counsel determined local regulations prohibited payouts, those users’ claims would have been canceled and redistributed to other creditors.

That framework drew criticism from creditor groups representing thousands of users in Asia. Weiwei Ji, an investor based in Singapore, led a coalition of over 300 Chinese claimants in filing a formal objection. Ji stated that China’s inclusion on the restricted list lacked justification and warned that such a precedent could allow other corporations to deny repayments to users based on their residence.

Following the objections, FTX withdrew the proposal, signaling an effort to minimize further disputes and maintain equal treatment for all claimants in the ongoing bankruptcy process.

Creditors See Step Toward Resolution

The withdrawal was welcomed by creditors who said it restored fairness to the repayment process. Several groups have noted that international customers have been excluded from many U.S. court discussions, but now expect more balanced consideration in future asset distributions.

FTX continues to progress through its bankruptcy restructuring, while founder Sam Bankman-Fried prepares for an appeal of his conviction for fraud in New York. He maintains that FTX and its affiliate, Alameda Research, were solvent before the 2022 collapse, disputing the valuation and liquidation methods used during the proceedings.