FTX Warns No Repayments for Creditors in Sanctioned or ‘Restricted’ Jurisdictions

Key Takeaways

• FTX has begun returning funds to creditors as part of its $16.5 billion recovery plan.
• Creditor repayments have been frozen in 49 jurisdictions, including China, due to legal uncertainties around crypto regulations.
• Claims from these regions are now classified as “disputed” and will only proceed if legal advice confirms they don’t violate local laws.

As FTX returns billions to creditors under its court-approved recovery plan, legal and regulatory hurdles complicate the process for claimants in dozens of jurisdictions.

While initial payouts are underway for smaller account holders, restrictions in several countries have forced the FTX Recovery Trust to pause distributions in key markets.

FTX Repayments Blocked in 49 Jurisdictions

The FTX Recovery Trust has frozen creditor payouts in 49 jurisdictions where crypto is restricted or banned, citing legal uncertainty.

The freeze, disclosed in a July 2 court filing, affects countries like China, Nigeria, Fiji, Andorra, and Zimbabwe. China accounts for 82% of the frozen value despite representing just 5% of total claims.

FTX now classifies claims from these regions as “disputed” and will process them only if legal counsel confirms they comply with local laws.

The Recovery Trust will send affected creditors a Restricted Jurisdiction Notice, giving them at least 45 days to object.

The move has sparked criticism from users, with some planning to take legal action and arguing that they remain eligible for USD payouts despite local bans on crypto trading.

Meanwhile, FTX reported that total disputed claims have fallen from $6.5 billion to $4.6 billion, with $8.3 billion in claims now approved. This offers some relief to creditors, though billions remain in limbo.

How the Repayment Process is Going

FTX has begun repaying creditors as part of its broader $16.5 billion recovery plan, starting with those owed $50,000 or less, referred to as the “Convenience Class.”

These creditors are receiving full repayment of their claim amounts and 9% annual interest accrued since November 2022.

The repayment process officially began on Feb. 18, 2025, with distributions processed through BitGo and Kraken.

The initial phase prioritizes minor retail claimants, with larger institutional creditors scheduled to receive payments in later stages through a staggered distribution process.

The repayments occur in fiat currency, such as U.S. dollars, based on the value of customer accounts as of November 2022, rather than cryptocurrency.