FTX withdrew its proposal to restrict or cancel refunds to creditors across 49 jurisdictions after a strong reaction from noteholders. The decision affects an estimated $800 million in claims and, because the motion was withdrawn “without prejudice,” it could be refiled, keeping thousands of affected parties on edge.
The administration of the FTX estate had advanced a motion called the “Restricted Jurisdiction Procedure” that aimed to test the legal feasibility of paying creditors in 49 countries and extinguish claims where compliance proved unviable. The approach sought to streamline payouts by eliminating claims deemed impracticable to satisfy.
The proposal encompassed nations such as China, Russia, Ukraine, Pakistan and Saudi Arabia and targeted a body of claims valued at around $800 million, according to reviewed documents. The scope underscored the global footprint of the creditor base and the complexity of cross-border compliance.
The plan drew more than 70 formal objections before the court, with particularly active opposition from Chinese creditors, who representatives said accounted for approximately 82% of the affected claims. The collective pushback ultimately forced the withdrawal of the motion.
Context and impact of the withdrawal of the refund plan
Representatives of creditors such as Weiwei Ji warned the measure would have set a “dangerous precedent” for future crypto liquidations, while others, including Sunil Kavuri, highlighted the gap between refunds in fiat value and the potential lost appreciation of the original crypto assets.
The withdrawal is a tactical victory for creditor coordination and boosts immediate confidence in the recovery process, but the possibility of resubmitting a similar measure sustains legal and operational uncertainty. Stakeholders remain alert to future filings that could reshape eligibility and distribution.
Additionally, the refund plan approved by the court projects a 119% return on claims in fiat values as of November 2022. However, that calculation does not account for the appreciation of crypto assets since that date, an opportunity loss that several creditors have emphasized.
For now, the withdrawal consolidates the court-approved repayment route, but the legal caveat that the motion can be reintroduced keeps key decisions open for the final distribution of funds and creditors’ confidence.
