Collapsed crypto exchange FTX has dropped its controversial “Restricted Jurisdiction Procedure” motion, a proposal that could have cut off repayments to customers in 49 countries, including China, Ukraine, Pakistan, and Russia.
The decision to withdraw it, part of FTX’s ongoing U.S. bankruptcy process, follows strong opposition from creditors, especially those in China, where most of the affected claims originated. The proposal aimed to determine whether customer payouts could legally be made in countries with unclear or restrictive crypto laws.
The motion dates back to July, when FTX had asked a U.S. bankruptcy court to approve a plan for handling claims from users in 49 countries where crypto is restricted.
Creditors push back
If approved, the plan might have led to about $800 million in claims being excluded from FTX’s bankruptcy distributions, amounting to nearly 5% of the exchange’s $16 billion estate. Most of those claims came from China, which alone accounted for about 82% of the disputed funds.
The proposal sparked immediate backlash. More than 300 Chinese claimants, represented by Weiwei Ji, objected in a Delaware bankruptcy court, calling the plan unfair and legally baseless. Under mounting pressure, FTX withdrew the motion on Monday without prejudice, meaning it can revisit the idea later but only through a new court process.
The withdrawal brought relief to thousands of international customers who feared being shut out of repayments. It also signals that the FTX estate may need a more practical approach to handling cross-border claims in regions where crypto rules remain unclear.
SBF’s “never insolvent” defense
The legal update comes as FTX Founder Sam Bankman-Fried (SBF) prepares for his appeal hearing in New York. Convicted of fraud and conspiracy last year, he continues to argue that FTX was “never insolvent,” describing the collapse as a temporary liquidity crunch rather than a loss of funds.
Last month, a social media account connected to SBF posted a 14-page document called “FTX: Where Did the Money Go?”, dated September 2025. In it, SBF claimed the reported $8 billion shortfall “never left” the company and accused the bankruptcy team of worsening the crisis through mismanagement and slow repayments.
FTX filed for bankruptcy in November 2022, after revelations of secret fund transfers between the exchange and its sister firm, Alameda Research, triggered a liquidity crisis that wiped out billions in customer assets. SBF is currently serving a 25-year prison sentence but continues to contest his conviction and seek clemency from the U.S. President Donald Trump.
