FTX Seeks Extension to Address $470 Million in Overseas Claims

FTX Trading Ltd. has filed a request with the US Bankruptcy Court for an extension to address objections from creditors regarding the freezing of $470 million in claims from 49 overseas jurisdictions. This move comes as part of the ongoing bankruptcy proceedings, which have seen significant pushback from creditors, particularly those from China.

Weiwei Ji, representing nearly 300 creditors from China, has been vocal in opposing the freeze. Ji argues that the motion to delay the claims process is a bad-faith effort and sets a dangerous precedent that could undermine trust in the global crypto ecosystem. The FTX Recovery Trust has also criticized the attempts to further delay the claims process, highlighting the potential impact on the recovery efforts.

The implications of this case extend beyond FTX, potentially affecting the broader crypto industry. The outcome could influence how international users perceive the safety and reliability of crypto exchanges. If FTX's motion is successful, it could legitimize the exclusion of creditor claims based on geographical restrictions, altering industry trust dynamics and potentially leading to tighter regulatory oversight of crypto exchanges.

This case also underscores the complexities of cross-border bankruptcies, particularly in the digital asset space. The legal outcomes could define how jurisdictions interact with international digital asset disputes, potentially impacting future crypto insolvency cases. Industry watchers note that the resolution of this case could enforce more stringent compliance for exchanges operating globally, ensuring that they adhere to regulatory standards across different jurisdictions.

The bankruptcy estate of FTX has requested additional time to address objections to its proposal to halt creditor repayments in nearly 50 countries. The estate argues that making payments in these countries could expose its directors and officers to regulatory penalties, including fines or even criminal charges. Critics, however, have pushed back against this proposal, warning that it could leave many claimants with nothing.

FTX began repaying creditors in February, over two years after its collapse. According to creditor advocate Sunil Kavuri, around $1.4 billion in claims remain unresolved. The bankruptcy court is expected to address the matter this week, as the estate faces mounting pressure to clarify its position on international repayments. The outcome of this case will be closely watched by industry stakeholders, as it could set a precedent for how cross-border crypto insolvencies are handled in the future.