Update (July 18, 1:30 pm UTC): This article has been updated to correct the number of filed objections to the motion.The FTX creditor community is awaiting a ruling next week that could let the FTX bankruptcy estate freeze payouts to creditors in restricted countries, including China.On Tuesday, the US Bankruptcy Court in Delaware is expected to rule on a motion that could allow the FTX estate to withhold payouts to creditors in 49 countries it has labeled as restricted jurisdictions.If the court approves the motion, affected creditors warn of devastating consequences that could extend far beyond the FTX case.This motion isnt just about FTX creditors.
It sets a dangerous precedent that could destroy trust in the global crypto ecosystem, said Weiwei Ji, a creditor known as Will on X.Restricted countries not determined by the courtAccording to Ji, a potential court approval of the FTX estates motion regarding the restricted countries could become a standard procedure for similar crypto bankruptcies.In future bankruptcies, any offshore exchange filing in the US could copy FTX unilaterally label countries like China as restricted jurisdictions, seize users assets, and legally refuse repayment, the creditor said in an X post on Thursday.Source: Weiwei JiRestricted lists arent determined by judges.
They just need to hire a lawyer to write a memo and thats it, Ji said.Nearly 70 objections filedSince the FTX estate filed the motion on July 2, the proposal has drawn nearly 70 objections as of Friday at 11:00 am UTC, according to court records reviewed by Cointelegraph on Kroll.Most objections originate from Chinese FTX creditors, comprising more than half of the total filings, including objections from Ji.This aligns with China accounting for 82% of the total value of potentially affected claims among jurisdictions labeled as restricted.Objections from Saudi Arabia and moreApart from the Chinese creditors, the list of objections includes at least one filing from Saudi Arabia by Faisal Saad Almutairi.By categorizing claimants in certain countries as ineligible for distributions, the plan discriminates unfairly.
My country does not prohibit cryptocurrency ownership or trading, and regulatory fears are speculative and not a valid legal basis for denying recovery, Almutairis objection reads.FTX estates motion (filed on July 2) next to an objection from Saudi Arabia from Thursday.
Source: KrollThe objection list also includes multiple filings from unspecified countries, including those filed by Oxana Kozlov, Amanuel Giorgis and more.Motions impact on FTX creditor claimsThe motion news has triggered volatility in FTX creditor claims, specifically related to the jurisdictions in question.Weve observed a sharp drop ranging from 20% to 30% in the pricing of claims originating from so-called restricted jurisdictions, said Federico Natali, partner at the bankruptcy claims-focused platform Paxtibi, told Cointelegraph.Related: Crypto payments abroad may be legal despite domestic bans in several countriesPaxtibi estimates that over $5.8 billion in FTX claims have been sold by customers to credit-focused funds, he said.The price offered is, in my view, not very friendly, Ji said in another post on X on Friday, referring to FTX claim buyers like FTXcreditor.com.
As for me, Im still fighting to get what we rightfully deserve not to be forced into selling our claims, he added.Source: Sunil KavuriAccording to FTX creditor Sunil Kavuri, there is still $1.4 billion of FTX claims pending resolution, with $380 million coming from China and $660 million in disputed claims.Yuriy Brisov, founder of the crypto regulation platform CryptoMap, told Cointelegraph that a decision to sell a claim depends on each persons risk tolerance, access to information and understanding of the legal process.The larger point is this: When claims become currency, legal precision becomes strategy.
And FTX is only one case in a new era of global digital insolvency, he said.Magazine: Bitcoin OG Willy Woo has sold most of his Bitcoin: Heres why