- In 49 countries, FTX Recovery Trust halts reimbursements for legal reasons.
- China has 82% of limited claims, 5% of $16B.
- Creditors must oppose within 45 days or lose claims.
FTX Recovery Trust has suspended creditor payments in 49 jurisdictions because of local legislation that limits cryptocurrency trading or distribution agents. In a July 2 filing with the Delaware bankruptcy court, the decision covers parts of the world such as China, Russia, and Pakistan, where legal ambiguities make fund distributions hard to execute. The creditors in such regions are at risk of losing their claims in case of the persistence of non-compliance.
Legal Barriers Block FTX Payouts
Source –X
As the contents of the filing reveal, local laws in the 49 jurisdictions that prohibit crypto trading or limit third-party distributors do not allow legal payments. The assertions of such areas, which are considered to be disputed, will be kept pending until the jurisdictions are identified as being on par. The trust estimates that these jurisdictions have 5 percent of the total claims of 16 billion dollars, and 82 percent of the restricted value is linked to China.
Affected countries will issue a so-called Restricted Jurisdiction Notice to the creditors explaining the rationale behind the hold and a 45-day period during which the creditors can object. The failure to contest the designation by filing a sworn statement accepting the jurisdiction of a U.S. court automatically leads to forfeiture. Money that has not been claimed or has been disputed would go back to the trust to be redistributed.
The trust will employ local legal professionals to evaluate the possibility of the payouts. On July 22, a court hearing will decide whether the proposed framework will go forward. When it is approved, the trust will give notice to deal with the objections and continue processing claims worldwide.
Creditor Challenges and Options
Source –X
The suspension has raised frustrations among creditors, especially those in China; where most of the restricted claims are based. The procedure of the trust involves creditors passing through complicated legal barriers such as filing affidavits and agreeing to the supervision of the U.S courts, which can prove expensive and inaccessible to many. Other creditors seek alternative solutions, including assigning claims to companies in recognized jurisdictions, but such a solution is not always successful.
Since February 2025, the FTX Recovery Trust has distributed 6.2 billion in two installments, including $5 billion in May. The distribution partnership with Payoneer has increased the number of jurisdictions to 93, yet the 49 jurisdictions that are restricted are left out. Creditors in these regions have to suffer delays or risk losing their money, which is only part of the aftermath of the FTX collapse in 2022.
The once $32 billion exchange declared bankruptcy in November 2022 over fraud allegations by former CEO Sam Bankman-Fried, who was sentenced to a 25-year prison term. Recovery actions by the trust, such as the sale of investments, such as Anthropic, have allowed partial repayments, and limited jurisdictions make the process difficult.
The trust still needs legal clarification to decrease the number of prohibited jurisdictions. The hearing of the court will determine the course of action in this complicated bankruptcy case, as awaited by the creditors.
