FTX Recovery Trust Halts 82% of Payments in 49 Jurisdictions

FTX Recovery Trust has halted payments to creditors in 49 restricted jurisdictions, as stated in its July 2025 court filing. This move underscores the challenges in repaying creditors under legal restrictions, impacting both trust and market dynamics. The trust, responsible for redistributing funds post-bankruptcy, has suspended payments in specific regions, with China accounting for 82% of the affected claims. Legal reviews are underway to determine eligibility for these funds.

The suspension involves the FTX Recovery Trust, established post-bankruptcy, operating within court directives. Payouts have been stopped pending legal confirmation in regions such as China, Nigeria, and Pakistan, which collectively claim significant portions of the $16.5 billion repayment plan. This decision influences both individual creditors and broader market sentiment, with creditor representatives expressing concern over payments frozen by jurisdiction. The staggered payment process affects both institutional and minor retail claimants.

Stakeholder concerns include the financial impacts on receiving entities and the potential loss of funds back to the FTX Trust. Legal deviations highlight compliance challenges in transnational fund disbursements, affecting policy settings. Potential outcomes include prolonged legal processes influencing funds' timelines. The situation emphasizes regulatory challenges in cross-border bankruptcy cases, requiring careful legal navigation and clarity for stakeholders in restricted nations.

The trust's decision to freeze payments in these jurisdictions highlights the ongoing challenges faced in repaying the exchange's global customer base. Chief restructuring officer John J. Ray III has overseen more than $5 billion in initial distributions and is preparing additional rounds. However, compliance with foreign crypto rules remains a major hurdle, as the trust navigates the intricate web of regulations that vary widely from one jurisdiction to another.

The trust's approach to managing claims from restricted jurisdictions is not without controversy. Some creditors may view the freeze as an unnecessary delay, while others may appreciate the trust's cautious approach in ensuring compliance with local laws. Regardless of the differing opinions, the trust's decision reflects its commitment to a thorough and transparent process, even in the face of significant challenges. The freeze on payments serves as a reminder of the complex legal and regulatory environment that surrounds cryptocurrency, and the need for careful consideration in navigating these issues.