A Chinese creditor has filed an objection to a motion from the FTX estate that would pause payouts to residents in jurisdictions with laws or regulations restricting cryptocurrency transactions, according to a Tuesday court filing.
The creditor, Weiwei Ji, stated that although they reside in Singapore, they have been classified as a Chinese creditor due to holding a Chinese passport. Ji noted that the objection was submitted on behalf of Ji and a growing group of Chinese creditors — reportedly over 300 individuals, according to the filing.
The objection raises two key arguments: First, that FTX settlements are made in US dollars, which are a standard legal repayment method. Second, it notes that cryptocurrency distributions are legal in China, with digital assets constituting “personal property.”
“My family holds four KYC-verified accounts with aggregate claims exceeding $15 million USD… We have fully complied with every procedural requirement under the Plan. The proposed motion now jeopardizes our right to distribution in an arbitrary and inequitable manner,” Ji argues in the document.
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The FTX Estate’s motion detailed
The FTX Estate filed a motion to pause payouts to residents of restricted countries on July 2, saying that “Distributions made by or on behalf of the FTX Recovery Trust into jurisdictions in violation of these legal restrictions may trigger fines and penalties, including personal liability for directors and officers, and/or criminal penalties up to and including imprisonment.”
The motion from the FTX Estate identified 49 countries that have unclear or restrictive crypto laws, places that could potentially lead to risks due to complex cross-border legal complications.
The motion was filed with the US Bankruptcy Court in Delaware. According to the motion, 5% of the value of allowed claims is due to residents in these restricted jurisdictions.
In addition to China, potentially restricted countries include Russia, Egypt, Afghanistan, Tunisia, Zimbabwe, Ukraine and Moldova.
The FTX Estate used Moldova as an example in its motion. “In Moldova, it is a criminal offense to engage in “the activity of providing services regarding virtual assets … on the territory of the Republic of Moldova, including in cases where this activity is auxiliary/supplementary to the main activity.”
The FTX Estate started repayments on February 18, beginning with convenience class members. The repayment amounts were made based on the value of the digital assets around the time of the exchange’s collapse in November 2022, a policy that irked some creditors.
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