FTX Debt Claims Blocked, Users in China and Other Regions May Lose Their Right to Claims

Recently, the FTX creditors' representative updated the compensation situation for creditors. According to the latest news, on February 18, 2025, users with amounts less than $50,000 will receive a compensation ratio of 120%. On May 30, 2025, users with amounts exceeding $50,000 will receive 72.5% compensation, while small users will still maintain a compensation ratio of 120%. It is expected that further compensation distributions will take place in October and December 2026, as well as in 2027. For large users who have already received 72.5% compensation, they will subsequently receive a compensation of 27.5% of the face value, ultimately achieving 100% compensation.

However, just as creditors were anticipating compensation, new variables have emerged in the claims against FTX. On July 4th, a representative of the creditors stated on social media that creditors from 49 jurisdictions, including China, may lose their right to claim. The claims funds from these regions account for 5% of the total funds, approximately 825 million USD, of which 82% belong to Chinese creditors, with the claimable asset value around 676.5 million USD.

FTX stated that it will seek legal advice to explore the possibility of distributions to restricted areas. If it is determined that a user belongs to a restricted area, their claim will be disputed. Users have 45 days to raise objections, but if the issue is not resolved, users will completely lose their distribution rights, and their share of compensation will be forfeited and returned to the FTX liquidation trust for distribution to other legitimate creditors.

In fact, as early as February 18, when FTX began compensating small users, it was stated that users from five regions—China, Russia, Egypt, Nigeria, and Ukraine—would temporarily be unable to participate in the claims distribution. At that time, Chinese users accounted for 8% of FTX's total user base, making them the most affected group.

In the face of this situation, some affected users have expressed their intention to take legal action. Some users pointed out that although cryptocurrency trading is not supported in mainland China, residents are allowed to hold cryptocurrencies, and the law recognizes the commodity attributes of virtual currencies. At the same time, the compensation process is settled in US dollars, and residents of mainland China are allowed to hold US dollars abroad, despite foreign exchange control restrictions.

For Chinese creditors, taking legal action requires weighing costs against benefits. For large creditors, legal avenues may be a feasible option; however, for small users, the legal costs may exceed the amount of the claim.

To this end, several third-party platforms have emerged in the market that provide debt sale services for FTX creditors. These platforms can assist Chinese users in selling their claims at discounted prices or in holding their claims. Currently, the main solutions include: selling claims, transferring claims to overseas entities, transferring claims under the name of overseas trustees, or changing residency.

As news spread about the restrictions on claims by Chinese users against FTX, more and more people began to seek these alternatives. However, it is estimated that among Chinese creditors, there may be only a little over 1,000 users with amounts exceeding $50,000, while many large clients have already handled their claims through various channels.

For affected users, waiting for years without receiving compensation is undoubtedly a heavy blow. In this situation, writing off a certain amount to achieve partial recovery of funds may be an unavoidable choice. However, if one insists on strict rights protection, facing high lawyer fees and complex legal procedures, Chinese creditors may face even greater challenges.

In the rapidly changing world of cryptocurrency, the pain left by the FTX collapse has not yet healed for all parties involved. The most regrettable aspect is that the cryptocurrency, which once carried dreams of wealth, may ultimately flow into the pockets of legal teams in the form of dollars. This incident serves as a reminder that one must exercise extra caution when investing in the cryptocurrency space and always stay informed about relevant legal and policy changes.