FTX Seeks Court Approval for Claims Process
FTX is asking the court to approve a new claims process. This could impact creditors from 49 countries where crypto is banned or restricted. The bankrupt crypto exchange wants a framework to handle claims from these jurisdictions.
The move affects billions in expected recoveries. It comes as the recovery estate processes distributions to customers hit by the November 2022 crash. Over 82% of disputed claims come from China.Other affected countries include Russia,Egypt,Morocco,and North Korea.
Under the plan, claims from these areas would be treated as disputed unless FTX gets legal advice confirming payouts are allowed. If not, claims might potentially be denied, and funds forfeited.FTX will notify affected users, giving them 45 days to object. Users must submit a sworn statement and waive service of process.
FTX will notify affected users via email or mail. If no objections are made by the deadline, or if an objection is resolved against the creditor, the jurisdiction may be officially designated as “restricted.” At that point, any associated claim distributions, including interest, would be forfeited and returned to the FTX Recovery Trust.
FTX will hire local lawyers to assess the legality of distributions in each region. The proposal has drawn criticism from many. Several creditors have raised dissatisfaction with the latest update,arguing that the proposal is unjust.On X, user Nicedy called the process “deeply discriminatory and procedurally unjust,” claiming that many creditors are being excluded based solely on nationality.
The latest proposal is still pending and will require approval from the bankruptcy court before it can be enforced. the FTX scandal centers on the dramatic collapse of one of the world’s largest cryptocurrency exchanges in November 2022. Founded by Sam Bankman-Fried, FTX misused billions of dollars in customer funds to cover losses at its sister trading firm, Alameda Research. Bankman-Fried was later convicted on multiple counts of fraud and conspiracy, marking one of the most high-profile financial crimes in recent history and shaking trust in the crypto industry.
- FTX seeks court approval for a new claims process.
- Claims from restricted jurisdictions would be automatically treated as disputed.
- Final payouts depend on whether the creditor can meet pre-distribution requirements.
The company filed for bankruptcy, leaving over a million creditors in limbo. Bankman-Fried was later convicted on multiple counts of fraud and conspiracy.
