Creditor Advocacy Forces FTX to Drop Payment Caps, Future Uncertain

The FTX Recovery Trust has reversed its controversial plan to limit creditor distributions in 49 jurisdictions, including China, Russia, and Saudi Arabia, marking a significant victory for global claimants in the crypto exchange's bankruptcy proceedings. The decision, announced in early November 2025, clears the path for creditors in these nations to access their share of the estimated $16 billion estate, with China alone accounting for 82% of the $800 million in claims from restricted regions, according to a TradingView report (FTX Withdraws Motion).

The trust had initially sought court approval for a "Restricted Jurisdiction Procedure" to evaluate compliance challenges in these countries, which could have led to the forfeiture of claims in jurisdictions deemed too complex for repayment. Local counsel would have assessed the feasibility of payouts, with unresolved restrictions triggering claim reallocation to the trust. However, the motion faced intense opposition, particularly from over 300 Chinese creditors represented by Weiwei Ji, who argued the proposal lacked legal basis and risked setting a harmful precedent for crypto bankruptcies, as described in a Coinotag report (FTX Recovery Trust Withdraws Motion to Limit Payouts for Chinese Creditors).

The withdrawal of the motion was made "without prejudice," allowing the trust to refile if necessary in the future. U.S. Bankruptcy Judge John Owens had previously questioned the need for such restrictions, noting that other major crypto bankruptcies, like BlockFi and Celsius, had successfully repaid Chinese creditors without similar hurdles, according to Cointelegraph coverage (FTX Drops 'Restricted Countries' Motion but Warns It May Refile). Despite the reversal, creditor advocates caution that the victory is conditional. "Until you receive the compensation you're owed, stay vigilant," wrote Ji on X, emphasizing the need for ongoing oversight.

The move also highlights broader tensions in the FTX bankruptcy. While the trust plans to distribute 119% to 143% of claims in fiat currency, critics argue this falls short of compensating for crypto-denominated losses; analysts noted these fiat payouts do not reflect post-2022 appreciation in assets like Bitcoin and Solana in a Yahoo Finance article (FTX Creditors From Restricted Regions Just Won Access to ...). Meanwhile, Sam Bankman-Fried's legal team has claimed FTX was "never insolvent," asserting that bankruptcy counsel mismanaged the company's liquidity, according to a LiveBitcoinNews article (Crypto News Today: SBF Team Insists FTX Never Went Bankrupt as Creditors Paid in Full). The former CEO's appeal hearing in New York underscores the ongoing legal battles surrounding the collapse.

The trust's decision to withdraw the motion follows months of legal maneuvering and creditor advocacy. Over 70 objections were filed against the original proposal, with critics warning it could erode trust in the global crypto ecosystem. The reversal not only streamlines the repayment process but also reduces administrative complexity for the trust, potentially accelerating distributions for the nearly 400,000 affected creditors.

While the estate has already distributed $6.2 billion in earlier rounds, the newly accessible $500 million to $800 million in restricted claims adds urgency to the process. Creditors are advised to monitor updates from the trust and prepare for standard claims submission procedures. However, the motion's refile potential remains a risk, with the trust reserving the right to revisit restrictions if regulatory hurdles intensify.