FTX Estate Seeks More Time to Halt Repayments in 49 Countries

The estate of the bankrupt cryptocurrency exchange FTX is seeking additional time in a Delaware court to respond to over 90 objections challenging its proposed halt to repayments in certain “foreign jurisdictions.” This request comes as the estate works to address the legal dispute surrounding its original motion to freeze repayments to creditors in these regions.

The “Motion for Leave” filed by the FTX estate aims to provide more time to present its case for halting repayments to creditors in jurisdictions with vague or restrictive crypto laws. The document was submitted on Sunday, with a hearing scheduled for Tuesday to address the original motion that sparked the legal controversy.

The estate’s original motion sought to halt repayments to countries with unclear or restrictive cryptocurrency regulations, arguing that initiating repayments to residents of these countries could result in fines, penalties, and even criminal charges, including imprisonment for directors and officers. This move affects creditors in 49 countries, with claims totaling $470 million. The largest group of affected creditors are residents, accounting for 82% of claims in these restricted countries, or $380 million.

Creditors have responded critically to the FTX estate’s efforts to block repayments. Weiwei Ji, representing hundreds of Chinese creditors, expressed frustration, stating that they have not taken a break since seeing the FTX’s omnibus reply to their objections. Another community member, known as “Mr. Purple,” suggested that the process, if approved by Judge Owens, is designed to make it highly likely that these claims will be reduced to zero. Sunil Kavuri, an FTX creditor, noted that there is $1.4 billion in FTX claims still pending resolution.

The FTX estate began repaying the exchange’s creditors in February, more than two years after filing for bankruptcy in November 2022. The estate’s efforts to halt repayments in certain jurisdictions have sparked a legal battle, with creditors challenging the proposed freeze on their claims. The outcome of this dispute will have significant implications for the distribution of assets to creditors and the resolution of the FTX bankruptcy case.