The FTX Recovery Trust backed off its controversial bid to freeze creditor payouts in countries like China and Russia, but warned it could renew the motion in the future.
FTX Drops Restricted Countries Motion Amid Creditor Backlash
The FTX Recovery Trust, which oversees the bankruptcy proceedings of the collapsed crypto exchange, has officially withdrawn its motion to limit creditor distributions in several “restricted foreign jurisdictions,” including China, Russia, Saudi Arabia, and Ukraine.
The motion, filed in July 2025, sought to block or delay payouts to creditors in 49 countries due to what the trust described as “unclear or restrictive local laws” governing cryptocurrency transactions.
In a court filing on Monday, the trust stated:
“If and when the FTX Recovery Trust seeks to renew the relief requested in the Motion, the FTX Recovery Trust shall file a motion and provide notice in accordance with the applicable rules.”
The language indicates that the withdrawal is “without prejudice,” meaning FTX retains the right to refile the motion later if it deems necessary.
Creditors Urge Caution Despite Small Victory
While the withdrawal marks a temporary victory for global FTX creditors, some warn it’s too soon to celebrate.
“This is a victory for all potentially affected creditors. But until you receive the compensation you’re owed, stay vigilant and keep acting together,” said Weiwei Ji, an FTX creditor known as Will on X.
The decision follows weeks of backlash, with more than 70 formal objections filed in bankruptcy court opposing the motion. Many creditors argued that blocking payouts based on jurisdiction violated the principle of equal treatment under bankruptcy law.
“This motion isn’t just about FTX creditors,” Ji previously noted. “It sets a dangerous precedent that could destroy trust in the global crypto ecosystem.”
Concerns Over Valuation and Repayment Terms
Despite recent progress in FTX’s restructuring, concerns remain about how creditors will be repaid. Sunil Kavuri, another high-profile creditor representative, cautioned that while FTX’s estate claims a 143% fiat repayment, the actual value may fall short when measured in crypto terms.
“FTX creditors are not whole,” Kavuri wrote. “The estate’s fiat repayments don’t reflect the real losses suffered in digital assets.”
The FTX estate continues to liquidate assets and resolve disputes as part of one of the largest bankruptcies in crypto history. The decision to drop — but not dismiss — the restricted countries motion suggests that the legal battle over creditor eligibility and distribution fairness is far from over.
For now, global creditors have earned a reprieve — but they remain on alert for FTX’s next move.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.