The estate of bankrupt cryptocurrency exchange FTX has filed a motion with a Delaware court requesting a delay to address over 90 objections regarding its proposal to halt repayments to creditors in certain “restricted jurisdictions,” according to a court filing reviewed by Cointelegraph.
Seeking Additional Time
The “Motion for Leave” seeks more time for the FTX Recovery Trust to present its case for suspending repayments to creditors in jurisdictions deemed to have vague or restrictive cryptocurrency regulations. A hearing related to this motion is scheduled.
The estate cited the “high volume” of objections received, stating: “Given the high volume of Objections received up until and following the Objection Deadline, the FTX Recovery Trust required additional time to draft, finalize, obtain approval of and file the Reply.”
Argument and Implications
FTX’s original motion sought to halt repayments to residents of specific countries citing potential legal risks. It stated that initiating repayments to individuals in these “restricted jurisdictions” could trigger fines, penalties including personal liability for directors and officers, and even criminal charges with imprisonment.
If successful, the halt affects creditors in 49 countries with total claims amounting to $470 million. Notably, creditors based in China represent the largest group within these restricted jurisdictions, comprising 82% of the claims ($380 million).
Related: FTX creditors speak on plans, lessons learned as repayments start
Creditor Concerns
The FTX estate’s motion has drawn criticism from certain creditors.
Weiwei Ji, representing hundreds of Chinese creditors, expressed frustration, stating she had not taken a break since seeing FTX’s response to their objections.
Crypto community member “Mr. Purple” described the situation as “worse than they think,” suggesting an approved delay could increase the likelihood of claimants receiving zero repayment. Another creditor, Sunil Kavuri, noted $1.4 billion in claims still pending resolution.
FTX commenced creditor repayments in February, over two years after filing for bankruptcy protection in November 2022.
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[Image: FTX Estate’s “Motion for Leave”. Source: Kroll]
[Image: List of potentially restricted jurisdictions…]
