In 2022, the bankruptcy of the cryptocurrency exchange FTX led to the formation of the FTX Recovery Trust. This entity was tasked with collecting and liquidating assets to repay creditors under court supervision. Recently, the Trust informed the Delaware Bankruptcy Court that it has added China, Russia, and 47 other countries to a list of restricted jurisdictions, which could halt creditor payments. A notable 5% of the potential $16 billion claims are situated in these nations, with a staggering 82% of that amount residing in China alone. The Trust’s petition is scheduled for a hearing on July 22.
Focus on Trust’s Management Report
If approved by the court, the FTX Recovery Trust will collaborate with local law firms in the restricted countries to evaluate the feasibility of making payments. Should the report be favorable, the Trust will continue processing transactions using payment services like Payoneer. Conversely, a negative report will result in the designation of the country as “restricted” under a court ruling.
The list of restricted countries includes Afghanistan, Algeria, Andorra, Aruba, Bangladesh, Belarus, and others. Notable mentions are China, Colombia, Egypt, Iran, Iraq, and Libya. The Trust has stated that it will commence evaluations upon receiving court approval. It was emphasized in the notification that countries may be removed from the list if legal clarity is achieved.
Creditors’ Right to Challenge
Creditors in regions designated as restricted have the right to submit a written objection within 45 days. Failure to do so will result in forfeiture of their claims. If objections are denied or not submitted, the affected sums will revert to the FTX Recovery Trust for redistribution among other creditors.
The petition also clarified that if local laws prohibit payments, the claim will be retracted. While the incorporation of Payoneer has expanded payment reach to 93 countries, users of the X platform still complain about the exclusion of certain countries. A creditor from China has vowed to contest every step of the process, urging others to rally in support.
Following the decision by Judge John Dorsey on July 22, the proposed measures will be implemented immediately if ratified, instigating a new phase in the repayment process.
