Chinese Creditor Challenges FTX Payout Block for 300 Users

In a recent development, a Chinese creditor of the bankrupt crypto exchange FTX has challenged a proposal that could potentially block payouts to users in certain jurisdictions, including China. Weiwei Ji, representing over 300 Chinese creditors, filed an objection to the Delaware Bankruptcy Court. Ji, a tax resident of Singapore, was classified as a Chinese creditor by FTX due to his passport, despite his residency status.

Ji claims that his family holds four Know Your Customer (KYC)-verified FTX accounts with combined claims exceeding $15 million. He argued that the proposed motion jeopardizes their right to distribution in an arbitrary and inequitable manner, as they have fully complied with every procedural requirement under the plan. The objection follows a motion filed by the FTX Recovery Trust seeking to evaluate claims across 49 jurisdictions flagged as “potentially restricted.” These jurisdictions include China, Russia, and Pakistan. The proposal involves engaging local legal experts to determine whether compliant distributions are possible. If not, the jurisdiction could be designated as restricted, and FTX could then reallocate those claims back to the trust.

Ji argued that the inclusion of China as a restricted jurisdiction “is unsupported by either fact or law.” He pointed to existing distribution mechanisms, including Hong Kong-based accounts, and referenced the Celsius Network case as precedent. He further noted that while mainland China bans crypto trading, digital assets are still considered legal property, and Hong Kong’s regulatory stance has become increasingly open to crypto. “Distributing claims to Chinese creditors poses no legal risk to the Trustee or its agents and constitutes a required step under the bankruptcy process,” Ji stated, urging the court to reject the motion’s proposed restrictions.