FTX, a prominent cryptocurrency exchange, is currently seeking court approval to dispute claims from 49 restricted jurisdictions. Surprisingly, Chinese users account for 82% of the total value of these claims, despite only constituting 5% of the allowed claims in these territories. This move by FTX has created a new hurdle for creditors in countries where crypto trading is subject to legal restrictions or where FTX lacked proper distribution licenses.
According to Sunil, a FTX Creditor Activist, the FTX Recovery Trust plans to treat claims from potentially restricted foreign jurisdictions as disputed until legal opinions determine the feasibility of distribution. Countries on the restricted list include China, Russia, Iran, North Korea, and 45 other nations where local laws either prohibit crypto trading or where FTX operated without proper licensing.
Under the proposed framework, affected creditors will receive a 45-day notice period to object to their jurisdiction’s restricted status. Those who fail to respond within the deadline will forfeit their distribution rights entirely. The Trust must file sworn statements waiving service of process and submitting to court jurisdiction for any objections.
This development threatens to delay or eliminate payouts for thousands of creditors who have been waiting for over two years since FTX’s collapse in November 2022. The exchange has distributed $6.2 billion across two major payment rounds, with the latest $5 billion distribution reaching eligible creditors in May 2025.
Chinese creditors are facing legal challenges against the restricted jurisdiction designation, arguing that mainland China recognizes the commodity attributes of cryptocurrency and permits its residents to hold digital assets. One creditor has even contacted a New York lawyer to raise objections at every procedural stage.
FTX’s restricted jurisdiction list includes countries like Afghanistan, Algeria, Belarus, Cambodia, Egypt, Libya, Myanmar, Pakistan, Syria, and Zimbabwe. The Trust argues that local laws create compliance risks that justify the disputed claim treatment, requiring affected creditors to demonstrate legal standing through sworn affidavits and subject themselves to the jurisdiction of U.S. courts.
Despite ongoing distribution challenges complicating the recovery process, FTX has distributed funds through two major rounds since February 2025. The exchange has added Payoneer as a third official distributor alongside BitGo and Kraken to expand payment accessibility across 93 jurisdictions. However, creditors in restricted territories remain excluded from these distribution channels.
In a recent development, FTX lawyers successfully defended against a $1.5 billion claim from Three Arrows Capital, arguing that the hedge fund’s losses resulted from failed trading strategies rather than improper liquidations. Former FTX CEO Sam Bankman-Fried remains imprisoned until December 2044 after receiving a 25-year sentence for fraud charges.
In conclusion, FTX’s court approval for restricted jurisdiction claims, particularly with Chinese users representing a significant portion of the total value, highlights the complex legal challenges faced by creditors in various countries. The ongoing distribution challenges and legal battles surrounding FTX’s collapse continue to impact the recovery process for creditors worldwide.