FTX Withdraws $800M Repayment Limit Plan for Creditors in 49 Countries

FTX, the collapsed crypto exchange, has withdrawn its controversial proposal to restrict repayments to creditors in 49 countries, including China, Russia, Saudi Arabia, and Ukraine, which would have blocked roughly $800 million in claims. This plan aimed to simplify repayment by labeling certain jurisdictions as "restricted" due to local legal challenges, potentially denying users in those countries their repayments. The proposal faced strong backlash from international creditors, especially from China, leading to over 70 formal objections and concerns about discrimination and unfairness based on geography. Creditor representatives praised the withdrawal as a victory but cautioned that the repayment process and actual compensation remain uncertain and that the estate's planned fiat compensation does not fully restore losses when compared to current crypto values. The dispute highlighted the tension between U.S. bankruptcy procedures and the global nature of cryptocurrency ownership, with critics warning that approving such restrictions could set a harmful precedent for future crypto insolvencies. The FTX Recovery Trust left open the possibility of revisiting the motion but for now, the reversal is viewed as a significant win for international creditors.