FTX Creditor Compensation Progress: Chinese Users Face Risk of Losing Claim Rights

Recently, the representatives of FTX creditors released the latest compensation progress. According to the plan, on February 18, 2025, small creditors (with claims not exceeding $50,000) will receive a compensation ratio of 120%. On May 30, 2025, large creditors (with claims exceeding $50,000) will receive 72.5% compensation, while small creditors will maintain the 120% compensation ratio. Subsequent compensation is expected to be distributed in October and December 2026, and successively in 2027. After receiving 72.5% compensation, large creditors will also receive the remaining 27.5% of the face value compensation, ultimately achieving 100% compensation.

However, just as the creditors were expecting compensation, a concerning piece of news came in. On July 4, the creditors' representative announced that creditors from 49 jurisdictions, including China, may lose their right to claim. The claims from creditors in these regions account for 5% of the total funds, approximately $825 million, of which 82% belong to Chinese creditors, with the claimed assets valued at approximately $676.5 million.

The creditor representative stated that FTX will seek legal advice regarding the distribution to restricted areas. If it is determined that the user belongs to a restricted area, the 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 compensation share will be confiscated and returned to the FTX liquidation trust for distribution to legitimate creditors in other areas.

This news has triggered strong dissatisfaction among affected users. Some users have stated that they have contacted lawyers in New York and are calling for more people to take action. They believe 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.

In the face of this dilemma, how should Chinese creditors respond? For large creditors, legal means may be an option. However, for small creditors, considering the legal costs, this may not be cost-effective.

Currently, multiple platforms have emerged in the market that provide debt sale services for FTX creditors. These platforms offer various solutions, including selling debts, transferring debts to overseas entities, transferring debts in the name of overseas trustees, or changing the place of residence, among others.

It is understood that many large creditors have handled their claims through various channels. For ordinary creditors, while it may be necessary to accept a certain degree of loss, achieving partial recovery of funds through these platforms is also a viable option.

This incident once again highlights the risks and uncertainties of the cryptocurrency market. For investors, while pursuing high returns, it is also essential to fully recognize the potential risks and to implement appropriate risk management.