FTX has withdrawn its Restricted Jurisdiction Procedure motion, which aimed to exclude about $800 million in claims from customers in 49 countries with restrictive crypto laws, including China, Ukraine, Pakistan, and Russia. This decision follows strong opposition from creditors, particularly in China, preserving access to repayments from the exchange’s $16 billion estate.
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Withdrawal announced: FTX dropped the motion on Monday without prejudice, allowing potential refiling later through a new process.
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Creditor opposition: Over 300 Chinese claimants, led by Weiwei Ji, objected in Delaware bankruptcy court, deeming the plan unfair.
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Impact scale: The excluded claims totaled roughly $800 million, or 5% of FTX’s $16 billion estate, with China accounting for 82% of the disputed funds.
FTX withdraws Restricted Jurisdiction Procedure amid creditor backlash, safeguarding $800M in claims for users in China and 48 other nations. Discover implications for bankruptcy repayments and global crypto regulations.
What is the FTX Restricted Jurisdiction Procedure and Why Was It Withdrawn?
The FTX Restricted Jurisdiction Procedure was a proposed motion in the exchange’s U.S. bankruptcy proceedings to evaluate and potentially exclude customer claims from 49 countries where cryptocurrency regulations are unclear or restrictive. Filed in July, it sought court approval to determine the legality of repayments in jurisdictions like China, Ukraine, Pakistan, and Russia. FTX ultimately withdrew the motion on Monday following intense opposition from affected creditors, ensuring that these claims remain eligible for distribution from the estate’s $16 billion in assets.
How Will This Affect Creditors in Restricted Jurisdictions?
The withdrawal provides immediate relief to thousands of international customers who could have been denied access to their funds. In the bankruptcy context, claims from restricted jurisdictions represent a complex challenge due to varying global laws on cryptocurrency ownership and transfers. According to bankruptcy filings, the procedure might have barred distributions totaling approximately $800 million—about 5% of the total estate—with Chinese claimants holding over 82% or roughly $656 million of that amount. Weiwei Ji, representing more than 300 Chinese creditors, argued in court that the plan lacked legal foundation and violated principles of equitable treatment under U.S. bankruptcy code. This opposition highlighted the procedural flaws, prompting FTX’s legal team to pull the motion without prejudice, meaning it could be reintroduced but would require starting the approval process anew. Experts in bankruptcy law, such as those cited in Delaware court documents, emphasize that such decisions underscore the need for inclusive strategies in cross-border insolvencies, especially in the volatile crypto sector where regulatory landscapes differ widely. Short-term, this preserves the status quo, allowing all verified claims to proceed toward potential payouts as the estate liquidation advances. Long-term, it may encourage FTX administrators to explore alternative compliance methods, like jurisdictional waivers or third-party escrow, to navigate restrictions without excluding legitimate creditors. Data from the bankruptcy estate shows customer claims exceeding $14 billion overall, with international users comprising a significant portion, making inclusive policies crucial for fair resolution.
The withdrawn plan could have excluded $800M in claims, about 5% of FTX’s $16B estate, with China making up over 80% of the affected funds.
Collapsed crypto exchange FTX has dropped its controversial “Restricted Jurisdiction Procedure” motion, a proposal that could have cut off repayments to customers in 49 countries, including China, Ukraine, Pakistan, and Russia.
The decision to withdraw it, part of FTX’s ongoing U.S. bankruptcy process, follows strong opposition from creditors, especially those in China, where most of the affected claims originated. The proposal aimed to determine whether customer payouts could legally be made in countries with unclear or restrictive crypto laws.
The motion dates back to July, when FTX had asked a U.S. bankruptcy court to approve a plan for handling claims from users in 49 countries where crypto is restricted.
Creditors push back
If approved, the plan might have led to about $800 million in claims being excluded from FTX’s bankruptcy distributions, amounting to nearly 5% of the exchange’s $16 billion estate. Most of those claims came from China, which alone accounted for about 82% of the disputed funds.
The proposal sparked immediate backlash. More than 300 Chinese claimants, represented by Weiwei Ji, objected in a Delaware bankruptcy court, calling the plan unfair and legally baseless. Under mounting pressure, FTX withdrew the motion on Monday without prejudice, meaning it can revisit the idea later but only through a new court process.
The withdrawal brought relief to thousands of international customers who feared being shut out of repayments. It also signals that the FTX estate may need a more practical approach to handling cross-border claims in regions where crypto rules remain unclear.
Frequently Asked Questions
What Happens Next for FTX Creditors After the Withdrawal?
Following the withdrawal of the Restricted Jurisdiction Procedure, all customer claims from the 49 countries remain eligible for inclusion in FTX’s bankruptcy distributions. The estate continues its liquidation process under U.S. court oversight, with verified claims prioritized for repayment from the $16 billion asset pool. Creditors should monitor official bankruptcy updates for timelines on payouts, expected to begin as distributions are approved.
Why Did Chinese Creditors Oppose the FTX Plan So Strongly?
Chinese creditors, holding the majority of the disputed $800 million, viewed the Restricted Jurisdiction Procedure as discriminatory and a violation of bankruptcy equity rules. Represented by Weiwei Ji in Delaware court, over 300 claimants argued that China’s crypto restrictions do not negate their property rights in the U.S.-based exchange. This natural pushback ensured their funds’ protection, aligning with principles of fair treatment for all international users.
Key Takeaways
- Relief for Affected Users: The motion’s withdrawal safeguards $800 million in claims, preventing exclusion of customers from 49 jurisdictions and promoting equitable bankruptcy resolutions.
- China’s Dominant Share: With 82% of disputed funds tied to Chinese claimants, the decision highlights the global nature of crypto user bases and the challenges of cross-border regulations.
- Future Implications: FTX may need to develop compliant alternatives for restricted areas, urging ongoing monitoring of bankruptcy proceedings for potential repayment updates.
The legal update comes as FTX Founder Sam Bankman-Fried (SBF) prepares for his appeal hearing in New York. Convicted of fraud and conspiracy last year, he continues to argue that FTX was “never insolvent,” describing the collapse as a temporary liquidity crunch rather than a loss of funds.
Last month, a social media account connected to SBF posted a 14-page document called “FTX: Where Did the Money Go?”, dated September 2025. In it, SBF claimed the reported $8 billion shortfall “never left” the company and accused the bankruptcy team of worsening the crisis through mismanagement and slow repayments.
FTX filed for bankruptcy in November 2022, after revelations of secret fund transfers between the exchange and its sister firm, Alameda Research, triggered a liquidity crisis that wiped out billions in customer assets. SBF is currently serving a 25-year prison sentence but continues to contest his conviction and seek clemency from the U.S. President Donald Trump.
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Conclusion
FTX’s withdrawal of the Restricted Jurisdiction Procedure marks a pivotal shift in its bankruptcy saga, protecting claims from users in China and other restricted jurisdictions while underscoring the complexities of global crypto repayments. As the estate, valued at $16 billion, progresses toward distributions, this inclusive approach reinforces trust in the resolution process. Creditors worldwide should stay informed on court developments, as future motions could refine how cross-border crypto claims are handled, potentially setting precedents for the industry amid evolving regulations.
