Chinese FTX Creditors Challenge Motion to Limit Payouts

Over 300 Chinese FTX creditors, represented by Weiwei Ji, have formally objected to a motion filed by FTX that could potentially limit their payouts. The motion, filed in the Delaware Bankruptcy Court, aims to reallocate $800 million in claims from 49 jurisdictions, with China accounting for 82% of the total. The creditors argue that the motion unfairly impacts their right to reimbursement through the bankruptcy process.

Under the proposed plan, FTX would consult legal experts in each of the 49 jurisdictions to determine if compliant distributions are possible. If not, those regions would be designated as restricted, and creditors in those areas could challenge the decision. However, if no objection is filed or if the court overrules them, FTX could forfeit those claims and redirect the funds to the broader FTX Recovery Trust.

Ji, who resides in Singapore for tax purposes but was classified as a Chinese creditor due to his passport, stated that his group of creditors has followed all required procedures under the bankruptcy plan. He argued that the proposed jurisdiction designation lacks both legal and factual support, and that the motion threatens their right to distributions unfairly.

In the objection, Ji cited existing legal channels that could allow compliant distribution of claims to Chinese creditors. He referenced the example of the Celsius Network bankruptcy, where similar distributions were routed through Hong Kong-based financial accounts. Ji also emphasized that digital assets are recognized as legal property under Chinese law, with Hong Kong adopting clear regulations supportive of cryptocurrency handling.

The filing concluded with a request that the court reject any decision to designate China as a restricted jurisdiction. Ji argued that distributing claims to Chinese creditors poses no legal risk to the trustee and urged the court to ensure that the bankruptcy process proceeds without excluding any compliant parties from rightful distributions.