FTX freezes $470 million in overseas claims, sparking fierce opposition, applies for extension to respond to creditors

On July 22nd, according to a court document reviewed by Cointelegraph, the management team of the bankrupt cryptocurrency trading platform FTX is requesting an extension in Delaware court to respond to over 90 objections to its proposed "freeze on partial foreign jurisdiction repayments". This document, titled 'Motion for Leave', was submitted on Sunday with the aim of buying more time for the FTX team to prepare its reasons for suspending payments to creditors in so-called 'restricted jurisdictions'. The court has scheduled a hearing on Tuesday regarding the motion that initially sparked controversy. The FTX management team stated in the motion that due to the large number of objections received before and after the opposition deadline, the FTX Recovery Trust requires additional time to draft, finalize, obtain approval, and submit responses. '' The initial motion submitted by the FTX management team sought to suspend the distribution of compensation to creditors in countries with unclear or restrictive cryptocurrency laws. They argue that if payments are made to residents of these countries, it may "trigger fines and penalties, including personal liability of directors and executives, and may even face criminal penalties, including imprisonment". This decision will affect creditors from 49 countries and involve claims totaling $470 million. Among them, Chinese residents are the most affected group, accounting for 82% of the total compensation amount of the so-called "restricted countries", which is about 380 million US dollars. The FTX management team's decision to freeze repayments has sparked strong criticism from some creditors. Among them, Weiwei Ji, the creditor representative, said that he was fighting on behalf of hundreds of Chinese creditors.