FTX’s latest proposal to exclude certain regions from creditor settlements is facing legal pushback from Chinese users.
On July 8, 2025, creditor Weiwei Ji filed an objection in Delaware Bankruptcy Court on behalf of 300 others, challenging the bankrupt exchange’s attempt to block payouts to users in 49 jurisdictions where crypto is either banned or lacks clear legal status. China, which represents over 80% of the impacted claim value, is among the primary countries listed, along with Russia, Morocco, North Korea, and others.
If the proposal is approved, creditors in these regions could be excluded from FTX’s ongoing distribution process.
Ji, a Chinese passport holder and Singapore tax resident, argued that labeling China as ineligible is both factually incorrect and legally baseless. He emphasized that distributing funds to Chinese users does not violate any regulations or expose the estate to criminal risk.
“The FTX Recovery Trust’s attempt to withhold distributions from Chinese creditors based on jurisdictional interpretations of crypto regulation is both unreasonable and legally unfounded,” Ji wrote. “There is no credible legal basis to conclude that distributions to Chinese creditors would subject the Trust, or any distribution agent, to regulatory or criminal risk.”
Ji pointed out that FTX claims are denominated and settled in U.S. dollars—not cryptocurrency—and can be legally received by Chinese residents through conventional means, such as wire transfers from Hong Kong-based accounts.
To bolster his argument, he also highlighted the nuanced legal status of crypto in China, arguing that the proposed restrictions misinterpret the country’s regulatory stance.
Under Chinese law, holding cryptocurrency is legal—even though trading is not
Although retail crypto trading is restricted in China, Ji argued that ownership of digital assets remains legal. He noted that Chinese courts have recognized cryptocurrencies like Bitcoin and Ethereum as personal property, citing a 2024 ruling from a Shanghai court that upheld the protection of digital assets under civil law.
Ji also highlighted Hong Kong’s distinct legal framework, which is more supportive of digital assets and actively promotes regulated crypto activity.
To strengthen his argument, Ji referenced past legal precedents, including the Celsius bankruptcy case, where Chinese users received payouts in U.S. dollars, and the Mt. Gox rehabilitation plan, which successfully distributed crypto to Chinese creditors via Kraken—neither of which imposed jurisdiction-based restrictions.
With a court hearing set for July 22, Ji is urging the judge to reject any proposal that would exclude Chinese creditors from receiving their share under FTX’s bankruptcy plan.
