FTX Seeks Extension to Address 90 Objections on Payment Freeze

FTX, the insolvent cryptocurrency exchange, has formally requested an extension from the Delaware State Court to address over 90 objections related to their proposal to freeze repayments in specific foreign jurisdictions. The motion, titled “Motion for Leave,” was submitted to allow additional time for the FTX Recovery Trust to prepare a comprehensive response to creditor concerns regarding the suspension of payments in countries with ambiguous or restrictive crypto regulations. A hearing on this motion is scheduled for Tuesday, underscoring the ongoing legal complexities surrounding FTX’s bankruptcy proceedings.

The management team of FTX has highlighted that disbursing funds to creditors in these “restricted jurisdictions” could expose directors and executives to significant legal risks, including fines, personal liability, and potential criminal charges. This freeze impacts creditors across 49 countries, with claims totaling approximately $470 million. Notably, Chinese creditors represent the majority, holding claims worth around $380 million, or 82% of the affected total. The move has sparked notable opposition, with representatives advocating for the rights of hundreds of Chinese claimants.

This development underscores the intricate legal and regulatory challenges that FTX faces as it navigates its bankruptcy process. The extension request reflects the complexity of managing international creditor claims, particularly in jurisdictions with stringent regulations on cryptocurrency. The impact on Chinese creditors is significant, given their substantial claims, and the situation highlights the need for a balanced approach that addresses both legal risks and creditor rights. The upcoming hearing will be crucial in determining the next steps for FTX’s recovery efforts and the resolution of these outstanding issues.