The bankruptcy estate of the defunct crypto exchange FTX has withdrawn its motion that sought to limit creditor distributions to "potentially restricted foreign jurisdictions."
The FTX Recovery Trust announced on Monday that it is retracting its request for a court order to implement restricted jurisdiction procedures in foreign countries with unclear or restrictive cryptocurrency laws. This motion had sought to freeze payouts to creditors in 49 countries, including China, Saudi Arabia, Russia, and Ukraine.
The notice filed by the trust states that if the FTX Recovery Trust decides to pursue this relief again, it will file a new motion and provide proper notice in accordance with applicable rules. The withdrawal is without prejudice, meaning the trust can refile the motion later.
Creditors Urge Continued Vigilance Despite Withdrawal
The withdrawal of the motion is considered a significant positive development for FTX creditors affected by the proposed restrictions. However, some creditors have cautioned against premature celebration.
Weiwei Ji, a creditor known publicly as Will on X, shared his perspective on Tuesday, stating, "This is a victory for all potentially affected creditors. But until you receive the compensation you’re owed, stay vigilant and keep acting together."
The FTX estate's decision to withdraw the motion followed substantial opposition from creditors. Within weeks of the motion's submission, at least 70 objections were filed in bankruptcy court.
In July, amid these objections, Ji had previously warned that court approval of the FTX estate's motion concerning restricted countries could establish a problematic precedent for future cryptocurrency bankruptcies. He argued at the time, "This motion isn’t just about FTX creditors. It sets a dangerous precedent that could destroy trust in the global crypto ecosystem."
Sunil Kavuri, a representative for many FTX creditors, also voiced concerns on Sunday regarding the potential value of FTX distributions. He highlighted that the payouts, being in fiat currency rather than cryptocurrencies, might be worth significantly less than creditors anticipate. Kavuri explained that the FTX estate's planned 143% fiat repayment does not accurately reflect the losses incurred in crypto-denominated terms, leaving creditors "not whole."