Newton Gitonga
The defunct crypto exchange, FTX, requests the bankruptcy court for authorization of a structured procedure to handle creditors from 49 nations that restrict crypto undertakings.
FTX prioritizes legal opinions to determine whether to reimburse users in these jurisdictions in compliance with the United States and foreign financial laws.
According to FTX creditor activist Sunil, these developments affect over 15K claims, representing approximately 5% of the filed claims.
However, the stakes are higher in value, with Chinese users dominating over 82% of disputed funds despite China’s crypto trading ban.
FTX: Restricted countries
Disputed claims
49 Jurisdictions -5% allowed claims in restricted countries 82% of value in China
Due to local laws that 1) crypto currency trading is not permitted or 2) distributors not allowed
Legal opinion to determine who receives compensation
Sunil made it clear that FTX will not proceed without legal support.
The firm seeks country-specific legal advice to determine whether reimbursing users in restricted regions would violate international and local laws.
FTX will process these claims if legal opinions suggest no violation.
However, the process will take another turn if permissible counsel confirms distribution to some nations is unlawful.
The non-operating trading platform will have three options in such instances.
Firstly, it might formally dispute the claim. Also, FTX can file an objection against the claim with the court.
Lastly, claimants might forfeit rights to distribution under the insolvency plan if the resolution is against the user.
China is at the center of it all
Meanwhile, the massive role of creditors from China raised eyebrows.
Most residents utilized offshore exchanges like FTX after the country suspended crypto mining and trading in 2021.
Now, these users claim over 82% of the value linked to potentially restricted distributions.
Meanwhile, FTX emphasizes navigating international financial policies to avoid excluding any victim.
Nevertheless, uncertainty dominated among Chinese and other users in similar countries as they feared missing out on the recovery.
What’s next?
FTX has revealed a bold process and timeline.
It will start identifying users in restricted countries after obtaining legal opinions.
The exchange will update affected users and allow them to respond.
The court’s final decision will be crucial for unresolved objections.
Meanwhile, users who fail to prove their legitimacy or don’t contest the complaint risk losing their claims.
While cautious, this structured approach reflects FTX’s dedication to regulatory compliance despite multiple users globally remaining in limbo.
FTT price outlook
FTX’s native token has struggled since it lacked utility after the company’s debacle.
FTT has lost over 50% from its all-time high and nearly 40% in the past year.
Meanwhile, the alt reacts to ongoing bankruptcy proceedings and broad market movements.
For example, FTT soared nearly 80% after the SEC chair hinted at reboot possibilities.
Also, the digital token displayed strength after FTX rejected 3AC’s $1.53 billion bid.
FTT hovers at $0.8264, reflecting bearish tendencies, possibly as the community digested the latest legal developments.
The 65% decline in 24-hour trading volume suggests dwindling interest in FTT.
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