FTX Credit Claims Take a New Turn, Chinese Users Face New Challenges

Recently, Sunil, the representative of FTX creditors, released the latest progress on debt compensation. According to the plan, on February 18, 2025, users with amounts less than $50,000 will receive a compensation ratio of 120%. By May 30, 2025, users with amounts over $50,000 will receive 72.5% compensation, while small users will still maintain a compensation ratio of 120%. Subsequent compensations are expected to be issued in October and December 2026, as well as in 2027. For large users who have received 72.5% compensation, there will be an additional compensation of 27.5% of the face value in the future, ultimately achieving 100% full compensation.

However, just as creditors were looking forward to the arrival of compensation, new variables emerged in the claims against FTX. On July 4, Sunil announced on social media that creditors from 49 jurisdictions, including China, may lose their claim rights. The claims from these regions account for about 5% of the total funds, valued at approximately $825 million, with 82% belonging to Chinese creditors, and the value of the claimed assets being approximately $676.5 million.

Sunil stated that FTX will seek legal advice regarding the distribution to these restricted areas. If it is determined that a user belongs to a restricted area, their claim will be disputed. Users have 45 days to file 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 other areas.

In fact, when FTX began compensating small users on February 18, it stated that five regions, including China, would temporarily be unable to participate in the claims distribution. The number of Chinese users accounts for as much as 8% of FTX's total users. At that time, affected users may have thought this was just a temporary restriction, and that FTX would propose a solution in the future. However, the news announced this time not only expanded the scope of restricted claim areas but also almost determined the claims rights of creditors in the restricted regions.

In the face of FTX's actions, the anger of the victimized users is difficult to contain. 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 mainland China does not support cryptocurrency trading, the law recognizes the commodity attributes of virtual currencies, and the compensation process is settled in US dollars. Although foreign exchange controls limit the amount of US dollars that residents of mainland China can receive each year, they are allowed to hold US dollars abroad.

For Chinese creditors, using legal means requires weighing costs against benefits. For large creditors facing significant losses, legal action may be a worthwhile choice. However, for smaller users, the compensation amount may not be worth the legal costs.

Currently, multiple third-party platforms have emerged in the market to provide debt sale services for FTX creditors. These platforms offer various solutions for Chinese users, including selling debts, transferring debts to foreign entities, transferring debts in the name of foreign trustees, or changing residency.

A debt resolution solutions manager stated that since the news broke about the restrictions on claims by Chinese users against FTX, the volume of inquiries has significantly increased. He estimates that there are likely only a little over 1,000 users among Chinese creditors with amounts exceeding $50,000, and many large clients have already handled their claims through various channels.

For damaged users, waiting for many years without receiving compensation is undoubtedly a heavy blow. In this situation, even if a certain amount is lost, recovering part of the funds becomes an acceptable option. However, if one chooses to strictly defend their rights, facing high attorney fees and complicated legal procedures, Chinese creditors may find themselves at a disadvantage.

Although the FTX collapse has been some time ago, the pain it left for those involved has not yet healed. In this rapidly changing cryptocurrency world, we must reflect: will the cryptocurrencies that once carried dreams of wealth ultimately only become dollars in the pockets of legal teams? This question is worth pondering for every participant.