The bankruptcy estate of the defunct cryptocurrency exchange FTX has withdrawn its motion to impose special payout procedures for creditors in 49 "restricted foreign jurisdictions." This decision comes after significant pushback from creditors who feared it could set a dangerous precedent for future crypto bankruptcies. While a victory for affected parties, some creditors remain vigilant, emphasizing that full compensation is still pending.
Key Takeaways
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FTX Recovery Trust withdraws motion to limit payouts to creditors in 49 countries.
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Motion cited unclear or restrictive local crypto laws as the reason for proposed limitations.
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Creditors strongly objected, warning of a negative precedent for the crypto ecosystem.
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The withdrawal is seen as a win, but creditors await actual compensation.
Withdrawal of the Motion
The FTX Recovery Trust filed a notice to withdraw its request for court authorization to freeze payouts to creditors in countries including China, Saudi Arabia, Russia, and Ukraine. The trust had initially sought these special procedures in early July, citing concerns over ambiguous or restrictive cryptocurrency regulations in these regions. The withdrawal was filed "without prejudice," meaning the trust reserves the right to refile the motion at a later date if deemed necessary.
Creditor Reaction and Concerns
The withdrawal of the motion is being hailed as a significant win by many FTX creditors. However, some, like creditor Weiwei Ji, caution against premature celebration. Ji emphasized the importance of continued vigilance and collective action until all creditors receive their owed compensation. He had previously warned that approving the motion could establish a harmful precedent, potentially eroding trust within the global crypto ecosystem.
Another prominent creditor representative, Sunil Kavuri, raised concerns about the overall value of the FTX distributions. He pointed out that the planned 143% fiat repayment might not accurately reflect the losses incurred in crypto-denominated terms, leaving creditors feeling "not whole."
Potential for Refiling
Despite the withdrawal, the FTX Recovery Trust's notice explicitly states that they may seek to renew the relief requested in the motion. This implies that the issue of restricted country payouts is not entirely resolved and could resurface in future filings, contingent on the trust's strategic decisions and evolving legal landscape.
Sources
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FTX drops ‘restricted countries’ motion but warns it may refile, TradingView.
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FTX drops ‘restricted countries’ motion but warns it may refile, Crypto Adventure.
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