New Developments in FTX Debt Claims: Creditors in Some Regions May Lose Compensation Opportunities

Recently, representatives of FTX creditors released the latest compensation progress. According to the plan, 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 users below $50,000 will still maintain a 120% compensation ratio. Subsequent compensations are expected to be distributed in October and December 2026, as well as throughout 2027. For large users who have already received 72.5% compensation, an additional 27.5% compensation will be provided in the future, ultimately achieving 100% compensation.

However, just as the creditors were anticipating compensation, an unsettling message arrived. On July 4th, a representative of the creditors stated on social media that creditors from 49 jurisdictions, including China, might lose their right to claim compensation. The claims from these regional creditors account for 5% of the total funds, approximately $825 million, of which 82% belong to Chinese creditors, with the claimable asset value being around $676.5 million.

The creditor representative stated that FTX will seek legal advice regarding the distribution 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 an objection, but if the issue is not resolved, the user will completely lose their distribution rights, and their compensation share will be confiscated 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 stated that users from China, Russia, Egypt, Nigeria, and Ukraine would temporarily be unable to participate in the claims distribution. At that time, many affected users may have believed that this was just a temporary restriction and that FTX would be able to propose a solution in the future. However, the latest announcement not only expanded the regions restricted from claims but also almost extinguished the hopes of creditors from the restricted regions to make claims.

In light of this situation, some affected users have expressed a desire to take action. Some users have called on social media for more people to come forward, emphasizing that while mainland China does not support cryptocurrency trading, the law recognizes the commodity attributes of virtual currencies, and Chinese residents are allowed to hold US dollars abroad.

For Chinese creditors, taking legal action requires weighing the costs against the benefits. For large creditors, legal avenues may be a worthwhile option. However, for small users, the amount of compensation may not be sufficient to cover legal fees.

Multiple third-party platforms have emerged in the market to provide debt sale services for FTX creditors. These platforms can help Chinese users sell their debts at a discounted price or hold their debts in custody. Currently, the service fees for such services are about 1-2%.

The main ways to handle FTX claims include: directly selling the claims, transferring the claims to overseas entities, transferring the claims under the name of overseas trustees or entities, and changing residency. If you choose to sell the claims, users need to undergo KYC verification, then conduct a video conference with the buyer to verify information and sign a contract, and finally complete the transfer.

According to industry insiders, there may be only over 1,000 users among Chinese creditors whose amounts exceed $50,000, and many large clients have already dealt with their claims through various channels.

For users who have suffered losses, waiting for years without receiving compensation is undoubtedly a heavy blow. Although transferring debt rights with a certain amount of loss is not an ideal choice, in the current situation, recovering some funds is still a viable solution.

This event once again highlights the risks and uncertainties of the cryptocurrency market, and reminds investors to be especially cautious when participating in related activities, while constantly paying attention to changes in relevant laws and regulations.