FTX Estate Drops Motion On Restricted Country Payouts

The bankruptcy estate of defunct crypto exchange FTX has dropped a motion seeking to limit creditor distributions to “potentially restricted foreign jurisdictions.”

The FTX Recovery Trust on Monday archived a notice withdrawing its motion for entry of an order in support of the confirmed plan authorizing it to implement restricted jurisdiction procedures in potentially restricted foreign jurisdictions such as China.

“If and when the FTX Recovery Trust seeks to renew the relief requested in the Motion, the FTX Recovery Trust will file a motion and provide notice in accordance with the applicable rules,” the notice says, adding that the motion was withdrawn without prejudice.

The trust filed the motion in early July, seeking court approval freeze payments to creditors in 49 countries such as China, Saudi Arabia, Russia and Ukraine, citing unclear or restrictive local crypto laws.

Don’t celebrate too soon, the creditor warns

The withdrawal is a significant victory for affected FTX creditors, but some say it is too early to celebrate.

“This is a victory for all potentially affected creditors. But until you receive the compensation you owe, stay vigilant and continue to act together,” Weiwei Ji, a creditor known as Will on X, he wrote in a post on Tuesday.

The decision of the estate to give up the motion came after an intense rejection by the creditors, with at at least 70 objections filed in bankruptcy court within weeks of the filing of the motion.

Amid objections in July, Ji warned that the court’s approval of the FTX summer motion regarding restricted countries could have set a standard for future crypto failures.

Related: Bankman-Fried says his biggest mistake was giving FTX to the new CEO before bankruptcy

“This move is not only about FTX creditors. It sets a dangerous precedent that could destroy trust in the global crypto ecosystem,” he wrote at the time.

Sunil Kavuri, a prominent representative of FTX creditors, warned on Sunday that the the value of FTX distributions may be much less than expected by many, given that payments are made in fiat rather than cryptocurrencies.

“FTX creditors are not healthy,” he wrote, adding that the planned 143% fiat refund of the FTX domain does not reflect the losses in crypto-denominated terms.