Key Takeaways:
- FTX seeks to freeze 5% of claims from 49 countries over crypto law concerns, pending legal review.
- China accounts for 82% of the frozen claims, sparking backlash from its creditors.
- A coordinated legal response from Chinese users could intensify pressure on the FTX Recovery Trust.
Bankrupt crypto exchange FTX has requested court approval to freeze creditor distributions in 49 jurisdictions with restrictive or unclear cryptocurrency laws. The motion, filed on July 2, outlines a proposal to place roughly 5% of all claims—primarily from China—under a “hold-and-review” structure. The FTX Recovery Trust argues that distributing funds to these regions could expose the estate to legal and regulatory penalties.
The trust noted in its filing:
“The collection of potentially applicable non-US laws and regulations is daunting.”
According to FTX, assets will only be released after legal reviews confirm that payouts would not breach local laws. If compliance cannot be guaranteed, the assets may be forfeited.
China Makes Up the Bulk of Affected Claims
While the motion lists 49 jurisdictions—including Russia, Iran, and Pakistan—Chinese creditors are disproportionately affected, making up a staggering 82% of the frozen claims. Many of these creditors have been waiting since the 2022 collapse to recover funds from the once-popular crypto platform.
Critics in China argue that the government’s ban on crypto trading does not necessarily prevent residents from holding or receiving digital assets offshore. They question why FTX refuses to support USD wire transfers to legal offshore accounts, given the claims are settled in USD.
I’ve already contacted my lawyer in New York and am waiting for her response.
— Will的折腾纪 (@zhetengji) July 3, 2025
I will definitely take action and will raise objections at every stage.
I also hope more people will step up. We can’t just sit and wait—this is absolutely unreasonable.
While mainland China does not…
“Although foreign exchange controls limit the amount of USD that mainland Chinese residents can receive annually, they are allowed to hold USD overseas,” said one creditor. “So why isn’t wire transfer settlement supported?”
Legal Pushback Gathers Momentum
The proposal has ignited frustration among Chinese creditors, many of whom have organized online to challenge the decision. Some suggest that FTX may be trying to use unclaimed distributions to fill gaps elsewhere in the recovery process.
A user named Zhetengji raised concerns on social media, claiming that “more than 1000 users” in Chinese WeChat groups are preparing legal action if the freeze proceeds.
“If victims in restricted regions unite together, it would force FTX to take the most serious consequences and pay for this fraud,” one creditor warned.
High-Stakes Legal Standoff Looms
FTX’s attempt to navigate international crypto laws has triggered a wave of opposition, especially from Chinese claimants who dominate the frozen claims pool. With a 45-day window for objections now open, the coming weeks could determine whether the court sides with FTX’s cautious legal approach—or with the aggrieved creditors demanding access to their long-frozen assets.
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.
Also Read: $70M Committed to Boba Network as Foundation Concludes BOBA Token Agreement with FTX Recovery Trust
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
