- The bankruptcy estate of the now-defunct crypto exchange FTX has withdrawn its request to limit creditor payouts in certain foreign countries.
- This motion had aimed to freeze payments in 49 countries, including China, Saudi Arabia, Russia, and Ukraine, due to unclear local crypto laws.
- The withdrawal followed strong opposition, with at least 70 objections filed in court.
- Creditors caution that receiving compensation remains uncertain despite this development.
- Repayments will be made in fiat currency, which does not account for losses in cryptocurrency value.
The bankruptcy estate of the collapsed cryptocurrency exchange, FTX, withdrew its request on Monday to impose special payment restrictions for creditors in certain foreign jurisdictions. This action relates to countries identified as “restricted” under the confirmed bankruptcy plan, including China and others with complex or unclear crypto regulations.
Earlier in July, the FTX Recovery Trust had filed a motion seeking court approval to freeze creditor payouts in 49 countries, such as China, Saudi Arabia, Russia, and Ukraine. The trust cited concerns about local laws that might interfere with or restrict payments to creditors in these regions. The recent notice of withdrawal states, “If and when the FTX Recovery Trust seeks to renew the relief requested in the Motion, the FTX Recovery Trust shall file a motion and provide notice in accordance with the applicable rules.” The withdrawal was filed without prejudice, meaning the motion could be presented again later.
The request to limit payouts met with intense pushback, with at least 70 formal objections lodged in bankruptcy court shortly after the initial motion. One creditor emphasized the importance of remaining vigilant until compensation is fully received, writing, “This is a victory for all potentially affected creditors. But until you receive the compensation you’re owed, stay vigilant and keep acting together.” Another representative highlighted that the value distributed through the estate is likely lower than expected because payments will be made in fiat currency instead of cryptocurrencies. They noted, “FTX creditors are not whole,” underscoring that the planned 143% fiat repayment does not reflect losses when measured in crypto terms.
For further details, the original withdrawal notice can be accessed here.
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