A key Chinese creditor of the now-bankrupt crypto exchange FTX filed a formal objection to FTX’s motion to block payouts to creditors in some jurisdictions, including China.
The objection was filed by a creditor named Weiwei Ji, who stated that he represented the needs of about 300 Chinese FTX account holders before the Delaware Bankruptcy Court. Although Ji is based in Singapore, where he pays tax, he has been designated as a Chinese creditor since he holds a Chinese passport.
In the filing, Ji said that his family had four KYC-verified FTX accounts with cumulative claims of more than $15 million.
He wrote, “We have done everything in the procedures conducted according to the plan. This would mean that the motion that is being presented would have us at the risk of being subject to uneven and discriminatory distribution of our rights.”
This objection comes on the heels of FTX Recovery Trust filing a motion to settle the claims of creditors in 49 jurisdictions where crypto is banned or restricted, including China, Russia, and Pakistan. The motion proposes to work with legal counsel in those areas to review the laws pertaining to distributing claims for each case in those jurisdictions.
If the legal advice confirms that the payout does not violate a law, the claim will be processed. In cases where the advice is unclear or negative, FTX can waive the claims and reassign the amounts to the trust.
As per court documents, the total claims of such regions are around $800 million, with users from mainland China comprising 82% of this figure.
Ji claimed that this motion to classify China as a restricted jurisdiction lacks any substance, either factually or legally. He highlighted existing distribution mechanisms and used the case of the Celsius Network bankruptcy proceedings as an example.
He further pointed out that while crypto trading was banned in China, digital assets were acknowledged as personal property, and that the regulation of digital assets in Hong Kong has become more forward-thinking. He underlined that the process of distributions to Chinese creditors does not carry legal risk and urged the court to reject the proposed restrictions.
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