{"id":13711,"date":"2025-07-04T17:53:30","date_gmt":"2025-07-04T15:53:30","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=13711"},"modified":"2025-07-04T17:53:30","modified_gmt":"2025-07-04T15:53:30","slug":"ftx-estate-seeks-guidance-on-distributing-funds-to-china","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/07\/04\/ftx-estate-seeks-guidance-on-distributing-funds-to-china\/","title":{"rendered":"FTX Estate Seeks Guidance on Distributing Funds to China"},"content":{"rendered":"

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FTX\u2019s insolvency estate has raised apprehensions regarding payments to creditors in nations with ambiguous or stringent cryptocurrency regulations.<\/p>\n

On Wednesday, the FTX estate submitted<\/a> a request to the US Bankruptcy Court for the District of Delaware, aiming to obtain permission for the FTX Recovery Trust to suspend distributions to creditors in \u201cpotentially restricted foreign jurisdictions.\u201d<\/p>\n

The jurisdictions \u2014 totaling 49 countries \u2014 harbor vague or stringent crypto regulations, potentially presenting risks due to intricate cross-border legal ramifications.<\/p>\n

\u201cDistributions executed by or on behalf of the FTX Recovery Trust into jurisdictions that contravene these legal limitations may activate fines and penalties, incorporating personal liability for directors and officers, and\/or criminal sanctions up to and including incarceration,\u201d the submission states.<\/p>\n

China and Russia among identified nations<\/h2>\n

With FTX creditors situated globally, the bankruptcy estate is taking measures to guarantee adherence to local laws in each jurisdiction prior to administering cryptocurrency distributions.<\/p>\n

Though regulations differ across the 49 identified nations, they broadly prohibit individuals or entities from partaking in activities related to digital assets, including crypto trading or distributing crypto-related proceeds to residents in those jurisdictions, the estate affirmed.<\/p>\n

The list of potentially restricted jurisdictions is outlined in FTX\u2019s court motion dated July 2, 2025. Source. Kroll<\/em><\/figcaption><\/figure>\n

\u201cFor instance, in Macau, \u2018financial institutions and non-bank payment institutions are expressly forbidden by mainland authorities from offering services for these tokens and virtual currencies,\u201d it mentioned.<\/p>\n

It further noted that all enumerated countries are under comparable restrictions, mentioning jurisdictions like China, Egypt, Iran, Russia, Saudi Arabia, Ukraine, and others.<\/p>\n

FTX estate seeks clarity<\/h2>\n

While emphasizing the potentially restricted jurisdictions for distributions, the FTX estate is not entirely halting the payments to the stated nations.<\/p>\n

Instead, it indicated that the recovery trust is retaining the distributions pending resolution and is prepared to authorize some of them as the process advances.<\/p>\n

According to the FTX estate, China comprises 82% of the value of affected asserted claims among all potentially restricted foreign jurisdictions.<\/p>\n

Mainland China remains one of the most contentious jurisdictions concerning cryptocurrency, as regulators have consistently prohibited crypto transactions<\/a> but have not explicitly outlawed<\/a> individuals from possessing digital assets.<\/p>\n

\"China,
Source: <\/em>Zhetengji<\/em><\/a><\/figcaption><\/figure>\n

Adjacent jurisdictions like Hong Kong have adopted a pro-crypto position<\/a>, approving crypto investment products like derivatives and exchange-traded funds.<\/p>\n

Related: <\/strong><\/em>Crypto payments abroad may be legal despite domestic bans in several countries<\/strong><\/em><\/a><\/p>\n

\u201cTo provide clarity to the FTX Recovery Trust and its stakeholders alike, the FTX Recovery Trust has established the restricted jurisdiction procedures to offer notice and a method for resolving whether distributions will be executed pursuant to the plan,\u201d the estate declared, adding:<\/p>\n

\u201cThe court\u2019s consideration and endorsement of the restricted jurisdiction procedures aligns with, and supports, execution of the plan.\u201d<\/p><\/blockquote>\n

While some in the community have voiced anger regarding the FTX estate\u2019s approach to potentially restricted countries for distributions, others argue that its position is justifiable.<\/p>\n

\u201cWhen it concerns token distributions in bankruptcy, there is still considerable legal ambiguity, and it doesn\u2019t surprise me that the FTX estate might refrain from making distributions in nations where such distributions could be illegal,\u201d Aaron Brogan, founder and managing attorney at Brogan Law, informed Cointelegraph.<\/p>\n

Magazine: <\/strong><\/em>Fake JD stablecoins, scammers impersonate Solana devs: Asia Express<\/strong><\/em><\/a><\/p>\n