FTX Recovery Trust Flags Global Claims Amid Legal Barriers

The FTX Recovery Trust has taken a decisive step in its ongoing efforts to settle claims tied to the collapsed crypto exchange . In a filing to the Delaware bankruptcy count on July 2, 2025, the Trust announced that it will treat claims from 49 foreign jurisdictions as “disputed”.

The move comes amid concerns that releasing funds to customers in those regions could violate local laws, particularly in countries where crypto trading or the use of distribution agents is prohibited.

Source: X

Why Claims are on Hold

According to the FTX Recovery Trust, this freeze affects creditor payouts from countries such as China, Zimbabwe, Nigeria, Andorra, Fiji. They said that it must conduct a detailed legal review before proceeding with any disbursement, to ensure it doesn’t breach regulatory  boundaries in these jurisdictions.

These regions have been designated as “Potentially Restricted Foreign Jurisdictions,” a term listed in the official filing’s attached schedule. Until the legal situation becomes clear, any claims from these locations will remain frozen and classified as “Disputed Claims.”

Legal Payouts Frozen Pending Legal Clarity

The FTX Recovery Trust plans to implement a hold-and-review system. Once the court approves the process, each affected creditor will receive a Restricted Jurisdiction Notice via their registered email or postal address.

This notice will:

• Outline the reason for the dispute,

• List the jurisdiction involved, and

• Provide an objection deadline of at least 45 days.

To challenge the designation, creditors must submit a sworn statement agreeing to the jurisdiction of the US court. While the objection is under review, they will suspend all associated payouts.

If unresolved by the record date, the funds and any retained interest will revert back to the estate.

Risk of Losing your Claim

The FTX Recovery Trust warns if a creditor fails to object within the given time or loses the court battle, their claim will be automatically forfeited.

In essence, this means the creditor permanently loses access to their funds.

It also emphasized that it considers the delivery of notice complete once an email or letter reaches the last known contact on file– a standard it describes as “commercially reasonable.”

China Holds Most of the Value

Despite making up just 5% of total creditor claims, these 49 countries account for a disproportionate 82% of the claim value: with the majority concentrated in China.

This makes China the most heavily affected country under the current restrictions.

Sunil Kavuri, a leading advocate, summarized the FTX Recovery Trust’s strategy, obtain opinions on each country, disburse legal and disruption tied to restricted regions.

The Road Ahead

As outlined in the filing, claims will remain marked as disputed until:

1. They completes a jurisdiction specific legal review.

2. The region is deemed legally permissible for payouts, and

3. The claim is either approved or denied officially.

The FTX Recovery Trust has made it clear that protecting the estate from risks is its priority–even if that means lengthy delays or losses for creditors in restricted countries.