Creditors Halt FTX's Plan to Block Repayments in 49 Nations, Averting Precedent

The FTX Recovery Trust has abandoned its proposal to restrict repayments in 49 jurisdictions, including China, Russia, and Saudi Arabia, following fierce opposition from creditors. The motion, which sought to exclude roughly $800 million in claims due to alleged regulatory complexities, was withdrawn "without prejudice" on Nov. 3, 2025, according to court filings. The reversal marks a pivotal win for creditors who had argued the plan unfairly targeted users based on geography and risked setting a harmful precedent for future crypto bankruptcies .

The proposed "Restricted Jurisdiction Procedure" aimed to assess whether local laws in the 49 countries would permit compliant payouts. If deemed impossible, claims in those regions could have been forfeited and redistributed to other creditors. China alone accounted for 82% of the $800 million in disputed claims, which represented about 5% of the estimated $16 billion in FTX's bankruptcy estate . Over 300 Chinese claimants, represented by creditor Weiwei Ji, filed objections in Delaware bankruptcy court, calling the plan discriminatory and legally unfounded .

The withdrawal follows global creditor pressure, including prominent advocate Sunil Kavuri, who warned that fiat-based payouts-planned at 143% of claims-fail to address crypto-denominated losses. "FTX creditors are not whole," Kavuri stated, noting that the value of distributions does not reflect the appreciation of assets like Bitcoin and Solana since 2022 .

Creditor groups had emphasized the broader implications of the motion. Ji, a Singapore-based investor, argued in July that approving the plan could erode trust in the global crypto ecosystem and establish a problematic standard for future insolvencies . The FTX Recovery Trust's decision to withdraw the motion, while retaining the option to refile, appears to prioritize short-term resolution over contentious litigation.

The move also aligns with ongoing legal challenges faced by FTX founder Sam Bankman-Fried, who remains in prison after being convicted of fraud and conspiracy. Bankman-Fried has repeatedly claimed FTX was never insolvent, blaming lawyers for mismanaging the 2022 collapse. However, creditors and experts have dismissed these assertions, with one X user stating, "You can't use customer funds to make investments or support your trading firm" .

While the withdrawal ensures broader access to distributions, questions linger about the practicality of repaying claims in jurisdictions with restrictive crypto laws. The FTX Recovery Trust has not yet outlined how it will navigate these challenges, and creditors caution that the victory is incomplete. "Until you receive the compensation you're owed, stay vigilant," Ji advised .

The decision also highlights the complexities of cross-border crypto bankruptcies. With FTX's estate holding billions in recoverable assets, including stakes in companies like Solana and Robinhood, the trust must balance legal hurdles with equitable distribution. Meanwhile, the broader crypto market remains wary of systemic risks, particularly as platforms like MEXC, which confirms 100% asset backing amid withdrawal surges .