Chinese FTX Creditor Challenges Plan to Block Payouts in Restricted Jurisdictions

A Chinese creditor of bankrupt crypto exchange FTX has pushed back against a proposal that could cut off creditor distributions to users in certain jurisdictions, including China.

Key Takeaways:

• A Chinese FTX creditor is challenging a plan that could block payouts in 49 jurisdictions.
• Ji, representing over 300 creditors, claims $15 million across four verified FTX accounts.
• He argues China should not be restricted, citing legal property status and Hong Kong access.

In a filing submitted to the Delaware Bankruptcy Court, Weiwei Ji objected to the plan on behalf of over 300 Chinese creditors.

Ji, a tax resident of Singapore, said FTX classified him as a Chinese creditor due to his passport, despite his residency.

He stated that his family holds four Know Your Customer (KYC)-verified FTX accounts with combined claims exceeding $15 million.

“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 wrote.

The objection follows a motion filed by the FTX Recovery Trust seeking to evaluate claims across 49 jurisdictions flagged as “potentially restricted.” These include China, Russia, and Pakistan.

The proposal involves engaging local legal experts to determine whether compliant distributions are possible.

If not, the jurisdiction could be designated as restricted, and FTX could then reallocate those claims back to the trust.

Claims from the 49 jurisdictions total roughly $800 million, with China accounting for the vast majority, 82%, according to figures cited by The Block.

FTX Claim Distribution

Restricted Jurisdictions: $470m

Chinese are the largest holder of FTX claims: $380m (82% of restricted)

KYC not completed- Bahamas: $290m
Disputed -multiple claims: $660m

Total – awaiting solution: $1.4bn

Total Estimated Allowed claims: $11bn pic.twitter.com/3BKpIkA3PW

Ji argued that the inclusion of China as a restricted jurisdiction “is unsupported by either fact or law.”

He pointed to existing distribution mechanisms, including Hong Kong-based accounts, and referenced the Celsius Network case as precedent.

He further noted that while mainland China bans crypto trading, digital assets are still considered legal property, and Hong Kong’s regulatory stance has become increasingly open to crypto.

“Distributing claims to Chinese creditors poses no legal risk to the Trustee or its agents and constitutes a required step under the bankruptcy process,” Ji stated, urging the court to reject the motion’s proposed restrictions.

FTX founder Sam Bankman-Fried is now projected to be released from federal prison on December 14, 2044, after serving less than 21 years of his 25-year sentence for fraud tied to the FTX collapse.

He was also fined over $11 billion. Federal records confirm that Bankman-Fried has been moved from New York to a transfer facility in Oklahoma following nearly two years behind bars.

The move comes after Bankman-Fried was reportedly placed in solitary confinement earlier this month for giving an unauthorized interview to Tucker Carlson.

His incarceration began in August 2023, after Judge Lewis Kaplan revoked his bail due to allegations of witness tampering involving leaked diary entries from former Alameda CEO Caroline Ellison, who was a key witness in the case.

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