FTX Backs Down After Backlash Over Cross-Border Repayment Limits

The bankruptcy team overseeing the collapsed crypto exchange FTX has quietly backed away from its attempt to block payouts to creditors in several countries with restrictive crypto regulations.

According to a filing on Monday, the FTX Recovery Trust withdrew its motion to apply special procedures for what it called “restricted foreign jurisdictions,” including China, Saudi Arabia, Russia, and Ukraine. The motion’s withdrawal, filed “without prejudice,” leaves the door open for the trust to revisit the issue in the future if necessary.

Originally submitted in July, the proposal sought to delay or suspend distributions in 49 countries where local laws might complicate crypto-related payments. The move immediately drew backlash from creditors, with more than 70 formal objections submitted to the court within weeks.

Creditors Cautiously Optimistic

The withdrawal marks a win for creditors who feared being excluded from repayment rounds, though representatives warned against premature celebration.

“This is progress, but no one should assume it’s over until payments actually arrive,” wrote Weiwei Ji, an FTX creditor who has been vocal throughout the case.

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Another creditor advocate, Sunil Kavuri, cautioned that despite the procedural victory, repayment values remain underwhelming. He reiterated that the estate’s planned 143% fiat compensation does not make creditors whole when compared to current crypto valuations.

“The repayments sound generous in dollars, but when measured in Bitcoin or Solana terms, the real recovery is far smaller,” Kavuri noted.

A Broader Precedent for Crypto Bankruptcies

The dispute underscored growing tension between U.S. bankruptcy procedures and the global nature of digital asset ownership. Ji previously warned that approving such restrictions could have created a precedent for future crypto insolvencies, potentially locking out creditors in certain jurisdictions from full participation.

For now, the FTX estate’s reversal is being viewed as a short-term win for international creditors – but many remain wary of what comes next in one of the most complex crypto bankruptcies in history.