FTX Trust Proposes New Claims Process for Creditors

TLDR

• Payouts may be forfeited in 49 restricted jurisdictions.
• $16 billion in claims potentially affected by new proposal.
• Court decision on claims process scheduled for July 22, 2025.

The FTX Recovery Trust has announced that payouts to creditors in certain jurisdictions may be forfeited unless local laws allow distributions. According to a July 2, 2025, court filing, this impacts up to 49 “restricted” jurisdictions, including China, Russia, Pakistan, Nigeria, Andorra, Fiji, and Zimbabwe. A hearing on the proposal is scheduled for July 22, 2025.

The Trust’s proposal is based on jurisdictions with legal restrictions on cryptocurrency. Sunil Kavuri, representing FTX creditors, has previously commented on these issues. The Trust aims to establish a new claims process for users from these regions.

FTX Recovery Trust Clarifies Its Strategy

The FTX Recovery Trust is at the forefront of the asset distribution process post-bankruptcy. Since the FTX collapse in late 2022, the Trust has been tasked with returning assets to creditors. The focus is on implementing a claims process that aligns with legal parameters in each jurisdiction.

The Trust’s stance is clearly outlined in court documents. “The FTX Recovery Trust wants the US bankruptcy court to decide on a new claims process for users from 49 crypto-restricted jurisdictions,” states a July 2, 2025, filing. The decisions by the court will guide subsequent actions in each region.

Impact on Global Creditors and Claimants

The new proposal potentially impacts $16 billion in total estimated claims, with around $800 million relating to restricted regions. Approved claims have grown to $8.3 billion, while disputed claims have fallen. Importantly, initial repayments prioritizing smaller creditors have begun, as around $5 billion is dispensed among those owed $50,000 or less.

Denial of payouts could limit the ability of creditors in restricted regions to recover their assets. This might lead to a scenario where creditors sell or assign their claims to someone in a permitted jurisdiction, affecting global markets.

Regions Facing Potential Forfeits

Decisions on claims for China, Russia, Pakistan, Nigeria, Andorra, Fiji, and Zimbabwe will be closely monitored. In China, crypto bans have historically impeded withdrawals, leading users to sell claims offshore. This proposal might reignite such trends.

The potential restriction on claims related to various legal frameworks creates a complex challenge for the Trust and buyers looking to acquire blocked claims in unrestricted jurisdictions. The outcome of this legal endeavor will set a precedent for future crypto-related bankruptcies.

Consequences for Major Cryptocurrencies

All creditor holdings denominated in USD, but initially pegged to BTC, ETH, and various altcoins, are at stake. Any forced liquidation in these assets impacting spot market conditions depending on jurisdictional sales. Historically, crypto bankruptcies like Mt. Gox and QuadrigaCX have had similar regional complications.

Within affected jurisdictions, forces like China have significant portions of claims, around 82%. The outcome could set a precedent in how regional regulations about cryptocurrencies influence asset recoveries in future bankruptcy scenarios.

Legal and Regulatory Observations

The US Bankruptcy Court’s impending decision is key. If the proposal is approved, legal teams will assess compliance with local regulations before executing the payouts. This involves interpreting regulations varied across 49 jurisdictions, some early voting against due to local restrictions.

As creditors organize and mobilize for objection, especially in social forums, the international legal community watches closely for how this unfolds. This case represents not only a legal challenge but a test of how jurisdictional laws interact within an evolving global crypto landscape.