FTX won't give compensation? Chinese users' $670 million claim may be rejected.

Author | Golem, Odaily

Original title: FTX claims face another obstacle, will the 670 million dollars owed to Chinese users not be repaid?

On July 1, Sunil, the representative of FTX creditors, published an update on the compensation status for creditors:

• On February 18, 2025, users with amounts less than $50,000 will have a compensation ratio of 120%;
• On May 30, 2025, users with amounts exceeding $50,000 will receive a 72.5% payout, while users with amounts less than $50,000 will receive a payout ratio of 120%;
• The expected compensation distribution time in the future is: October and December 2026, as well as 2027;
• Users whose amount exceeds 50,000 USD and have already received 72.5% compensation will subsequently receive 27.5% of the face value compensation, achieving a total of 100% compensation. (Note: Based on the compensation situation, the interest rate for FTX creditors after applying for compensation is approximately 40-80%.)

Just when the creditors were planning to wait calmly for their compensation, the claims of FTX creditors have gone awry again.

On July 4th, FTX creditor representative Sunil posted on the X platform stating that creditors from 49 jurisdictions, including China, may lose their rights to claim. The claims from these regions account for 5% of the total funds, approximately valued at $825 million (calculated based on a total of $16.5 billion in assets for compensation), of which 82% belong to Chinese creditors, with claim assets valued at about $676.5 million.

List of jurisdictions where claims may not be available

At the same time, Sunil stated that FTX will seek legal advice to allocate to restricted foreign jurisdictions. However, if it is determined that a user belongs to a restricted foreign jurisdiction, the claim will be disputed, and the user has 45 days to raise an objection. If the issue is not resolved, the user will completely lose their allocation rights, and their share of compensation will be confiscated and returned to the FTX liquidation trust for distribution to legitimate creditors in other countries and regions.

In fact, when FTX officially began compensating users with amounts less than $50,000 on February 18, it indicated that users from China, Russia, Egypt, Nigeria, and Ukraine would temporarily be unable to participate in the claims distribution, among which, Chinese users accounted for the largest number, making up 8% of FTX's total user base.

At that time, the affected users might have thought that the limitation on claims by jurisdiction was only temporary, and that FTX would be able to propose a solution in the future. However, the news released today has expanded the regions that limit claims, and the wording nearly sentences the creditors in the restricted areas to death regarding their right to claim.

For actions like those of FTX, the anger of the affected users can no longer be suppressed. User @zhetengji stated that they have already contacted a lawyer in New York and called for more people to take action:

I will definitely take action and raise objections at every stage. I also hope more people can stand up. We cannot just wait—this is absolutely unreasonable. Although mainland China does not support cryptocurrency trading, residents of mainland China are allowed to hold cryptocurrencies. The law recognizes the commodity attributes of virtual currency. The claims process is settled in US dollars. Although foreign exchange controls limit the amount of US dollars that residents of mainland China can receive each year, they are allowed to hold US dollars abroad.

How should Chinese creditors collect debts?

When using legal means, it is also necessary to consider the costs and benefits. For major creditors who have suffered losses of tens or hundreds of millions of dollars on FTX, the costs and benefits of legal action may be roughly equal; but for users with amounts less than $50,000, the funds for claiming compensation seem not worth it compared to the funds, time, and effort spent on legal avenues.

Are we really supposed to watch our money flow into someone else's pocket? Of course not. In fact, there are already many third-party platforms in the market providing debt sale services for FTX creditors, such as RootData, claims market, ftxcreditor, and Xclaim. To gain a more detailed understanding of how FTX creditors in China can "collect debts," Odaily reached out to Loners Liu, the FTX debt solution manager at RootData, to learn more about the situation.

RootData's main business is a financing information platform, and it also provides FTX debt sale services for Chinese users. It has successfully handled over 1,000 cases, assisting in processing debt amounts exceeding $300 million. Loners Liu stated, "You can think of us as a brokerage like Lianjia; we help Chinese creditors sell their debts at a discounted price (a one-time sale rather than in batches for compensation), or we can also help them manage their debts."

RootData currently charges a service fee of 1-2% for this service, which helps Chinese users handle FTX claims mainly through the following four solutions:

• Sell debt rights;
• Assigning creditors to entities owned outside of China;
• Transfer the creditor's rights in the name of trustees, banks, or other entities outside of China;
• Change residence;

If you are selling a debt claim, you first need to log in to claims.ftx.com to confirm KYC approval. Then, both the buyer and seller need to schedule a video conference, log in to the backend for verification, and sign the contract. Finally, complete the transfer of funds.

"Previously, some people were hesitant about whether to actively handle their claims, but after the news came out these days that Chinese users' FTX claims are restricted, many people have come to consult." Loners Liu answered my questions while responding to inquiries from creditors.

"However, according to our estimates, there may be only over 1,000 users among Chinese creditors whose amounts exceed $50,000," said Loners Liu, indicating that many large clients have actually handled their debts through various channels.

From the perspective of the affected users, waiting for years without receiving any money is akin to a bolt from the blue. The 45-day appeal period given by the creditor representatives, combined with the headache-inducing efficiency of handling cross-border claims, delivers another blow. At this moment, being able to write off a certain amount (bond transfer rate + a small handling fee) to achieve partial recovery of funds can be considered a reasonable solution under the circumstances.

However, if one insists on legal principles and strictly defends their rights, facing bankruptcy lawyer groups that earn exorbitant fees and hold the power of discourse in rules, Chinese creditors indeed have nowhere to find support. In the ever-changing and rapidly evolving world of cryptocurrency, the FTX collapse seems distant now, but the scars left on all parties involved have yet to heal. The most unbearable scene is when the cryptocurrencies that once carried dreams of wealth ultimately end up in the pockets of legal teams as US dollars.