FTX Repayment Plan Withdrawn After Backlash from Creditors in 49 Countries

FTX, the crypto exchange that collapsed in 2022, has withdrawn a controversial proposal that could have prevented thousands of users from receiving their money back. The plan was part of the exchange’s ongoing bankruptcy proceedings and would have allowed FTX to deny repayments to creditors in certain countries if local regulations made the process “too difficult.” Following heavy backlash from users—particularly those in China—FTX decided to retract the proposal.

What FTX Planned to Do

As part of its Chapter 11 case, FTX submitted a proposal called the “Restricted Jurisdiction Procedure.” This procedure would have allowed the exchange to label certain countries as “restricted” and block users from receiving their repayments. The affected regions included China, Russia, Ukraine, Pakistan, Saudi Arabia, and 44 others—49 jurisdictions in total.

The financial implications were significant. The move would have excluded roughly $800 million worth of claims, representing about 5% of the total repayment amount FTX expects to distribute. China alone accounted for 82% of the affected funds, meaning most of the blocked users would have been Chinese.

FTX had planned to hire legal teams in each country to determine whether repayment was legally feasible. If lawyers concluded that compliance was too complex, FTX could cancel the claim and redistribute the funds to other creditors. Affected users would have had just 45 days to contest the decision—otherwise, their funds could be forfeited.

Why Creditors Were Outraged

Creditors, especially those in China, immediately pushed back. More than 300 Chinese claimants filed an objection in court, arguing that FTX had no valid justification for treating certain countries differently. They described the proposal as unfair and discriminatory, claiming it could deprive users of their money simply because of where they live.

The objection was led by a creditor named Weiwei Ji, who said the plan violated basic principles of fairness in bankruptcy cases. Instead of helping users recover their funds, he argued, FTX was exploiting legal technicalities to reduce its liabilities.

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Sam Bankman-Fried Back in the Spotlight

The controversy emerged just as former CEO Sam Bankman-Fried prepared to appeal his conviction in U.S. court. In a recent written statement, Bankman-Fried insisted that FTX was never insolvent and always had sufficient assets to repay customers. He described the collapse as a “liquidity crisis,” blaming user panic and mismanagement by the bankruptcy team rather than insolvency.

FTX’s sudden reversal on its repayment exclusion plan adds yet another twist to the complex unwinding of one of crypto’s biggest collapses. For creditors who have waited nearly two years, the decision revives hope that repayments will ultimately be distributed based on fairness—not geography.

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