In a significant turn of events, FTX has abandoned its contentious proposal to classify roughly US$800 million in customer-claims across 49 countries as “restricted” compensation. Originally part of the firm’s bankruptcy-filing strategy in Delaware, the plan sparked strong opposition—most vocally from creditors in China, who perceived the mark-down of their claims as unfair due to their geographic location.
Background & initial plan
Following its collapse, FTX sought to simplify the claims-and-recovery process by segregating certain customer requests into a “restricted claims” pool. In effect, the plan would have treated many global customers’ claims — especially from China — differently, potentially reducing their recovery share. The rationale given was administrative: FTX would engage local attorneys in each jurisdiction to vet claim legitimacy. However, for many customers the approach felt like a de facto demotion of their claims based solely on location.
Pushback & reversal
A leading voice in the opposition was investor Weiwei Ji in Singapore, acting on behalf of about 300 Chinese-claimant customers, who formally objected to the unequal treatment of claims. Under mounting pressure, FTX rescinded the “restricted claim” classification and restored full recovery rights for all creditors, a move welcomed by many global stakeholders.
Implications
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The reversal marks a major win for international creditors, signalling that location-based claim stratification may not hold in high-profile global insolvency cases.
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It may also set a precedent for how bankrupt crypto-exchanges treat dispersed user bases — equal treatment may increasingly become the expected norm.
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For FTX’s founder, Sam Bankman‑Fried, this change comes amid his appeal against a fraud conviction, wherein he continues to assert that FTX still had solvency at the time of collapse.
What’s next?
While the plan to classify US$800 million of claims as restricted is off the table, the path to actual recovery remains complex. Creditors will still need to substantiate their claims, and FTX’s estate must navigate legal, jurisdictional and logistical hurdles before repaying affected customers.
In summary, FTX’s decision to withdraw the controversial compensation-classification plan is a positive development for global claimants. It underscores the growing importance of equitable treatment in cross-border insolvencies within the crypto sector. As the process moves forward, close attention will be required on how creditor claims are verified, how recovery funds are distributed, and how the firm’s remaining assets are managed.
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