FTX reverses freeze on creditor payouts—but uncertainty lingers for global crypto claims
FTX, the cryptocurrency exchange that collapsed late last year, has withdrawn its motion to freeze payouts to creditors in 49 countries. The move is seen as a victory for affected creditors, but some remain cautious.
The original motion, submitted in July 2025, sought to halt payments in countries like China, Egypt, Nigeria, Saudi Arabia, Russia, and Zimbabwe. Creditors swiftly responded, filing at least 70 objections in bankruptcy court. FTX's FTX Recovery Trust had initially requested asset seizure measures against creditors in the U.S., the British Virgin Islands, and the Bahamas, but clear solutions for such regulations were not known in these countries.
The withdrawal is 'without prejudice', leaving open the possibility for FTX to refile the motion later. Retail debtors in eligible regions may receive their full entitlements, but others could face delays, complex court procedures, and potential permanent loss of reclamation rights. Affected claims amount to roughly 5% of total allowed claims, with China alone accounting for 82% of that frozen value. The outcome could set a significant precedent for future crypto bankruptcies handling cross-border asset recovery. However, payouts may still fall short of expectations, and losses could be higher when measured in crypto terms rather than fiat.
FTX's withdrawal of the motion is a relief for creditors, but the situation remains uncertain. The crypto industry and affected parties will watch closely as the case progresses, potentially setting a crucial precedent for future cross-border crypto bankruptcy proceedings.
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