Chinese Creditors Challenge FTX Plan That Risks Forfeiting $800M in Bankruptcy Claims

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Key Takeaways:

• $800 million in claims across 49 jurisdictions are potentially at risk, with China accounting for the majority.
  
• Lead creditor Weiwei Ji argues the FTX motion lacks legal basis and unfairly penalizes Chinese claimants.
  
• Hong Kong’s financial system is cited as a compliant route for crypto distributions, as seen in similar cases.

A group of over 300 Chinese claimants has formally objected to a key FTX bankruptcy motion that could result in the forfeiture of hundreds of millions of dollars in crypto claims. The filing, made on July 9 in the Delaware Bankruptcy Court, raises serious concerns about the potential exclusion of compliant foreign creditors from distributions.

$800 Million in Claims Could Be Forfeited

FTX has proposed a motion allowing it to withhold distributions in jurisdictions where it deems legal compliance unfeasible. The company identified around $800 million in creditor claims across 49 such jurisdictions—with Chinese nationals representing approximately 82% of that total, according to internal estimates.

If a jurisdiction is classified as restricted, creditors from that region could lose their claims unless they successfully object or meet specific legal thresholds. In such cases, the disputed funds would be redirected into the FTX Recovery Trust, significantly reducing potential recovery for affected claimants.

Lead Creditor Challenges China’s Inclusion

The formal objection was led by Weiwei Ji, who filed on behalf of a large group of Chinese claimants. Ji, a Singapore tax resident holding a Chinese passport, said his group has over $15 million in verified claims. Despite meeting all requirements under the bankruptcy plan, Ji and others were categorized as Chinese creditors—making them vulnerable to exclusion under the proposed plan.

Ji argued that this classification unfairly threatens their right to reimbursement and lacks legal justification, stating that the motion “is not based on sufficient legal or factual evidence.”

Hong Kong Highlighted as a Legal Distribution Channel

To challenge FTX’s rationale, Ji pointed to Hong Kong as a viable, compliant intermediary. He referenced the Celsius Network case, where similar crypto payouts to Chinese users were processed via Hong Kong. Additionally, he noted that digital assets are recognized as legal property under Chinese law, supporting the notion that FTX distributions could be legally completed.

Also Read: FTX Creditor Payouts 2025: Court Filing Seeks to Freeze Claims in 49 Countries

Ji urged the court to consider existing banking and legal structures that allow for cross-border crypto settlements without breaching local regulations.

Ji’s objection highlights a growing concern among international creditors about how FTX’s bankruptcy strategy could marginalize foreign participants, particularly in China. With hundreds of millions at stake, the Delaware court’s response could set a significant precedent for how cross-jurisdictional crypto claims are handled in bankruptcy proceedings.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.