FTX Drops Motion to Restrict Creditor Payments in Certain Jurisdictions
The bankruptcy estate managing the aftermath of FTX has withdrawn its attempt to limit payouts to creditors in specific foreign jurisdictions. The change comes after feedback from creditors and ongoing debate regarding international crypto laws.
Details of the Withdrawal
On Monday, representatives for the FTX Recovery Trust filed a notice in U.S. Bankruptcy Court formally withdrawing a motion meant to implement special payout procedures for creditors based in jurisdictions labeled as 'restricted,' including China, Saudi Arabia, Russia, and Ukraine. Under the original plan proposed in early July, the trust sought court authorization to withhold or modify payments to claimants in these regions due to regulatory uncertainties and local laws limiting crypto activity.
The notice stated that the motion is withdrawn without prejudice, meaning the trust may revisit the issue in the future if circumstances change. If such an action occurs, it will be subject to the courts rules and notifications.
Response from Creditors
Creditors and their representatives welcomed the decision as a positive step. Weiwei Ji, one of the most vocal FTX creditors, called the move a victory while urging creditors to continue monitoring the process. He highlighted ongoing concerns about the state of compensation for affected parties.
Sunil Kavuri, another prominent creditor advocate, pointed out ongoing dissatisfaction among claimants regarding the planned repayment structure. Despite the estates plan to offer 143% of claim values in fiat, critics argue that the recovery still does not fully match losses experienced in crypto terms, especially due to market volatility since FTX's collapse.
Wider Implications
Some in the community noted that had the motion proceeded, it could have established a precedent impacting future global crypto bankruptcy cases. Concerns remain about payout methods and protecting creditor interests as the estate continues to distribute assets.
- The FTX estate may revisit the matter if future legal or regulatory shifts occur.
- Eligible creditors are encouraged to stay updated on ongoing bankruptcy proceedings.
The withdrawal does not change the mechanics of compensation immediately but signals continued scrutiny around the handling of international creditor claims in major crypto bankruptcies.
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