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FTX Creditor Payouts Begin, but Many Jurisdictions Are Excluded—China Leads the Ineligible List

Irene Mukiri by Irene Mukiri
February 21, 2025
in Binance Feed, Market
Reading Time: 4 mins read
FTX Creditor Payouts Begin, but Many Jurisdictions Are Excluded—China Leads the Ineligible List
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  • FTX’s repayment plan favors small creditors, leaving large claims pending until May.
  • Fiat-based settlements may boost liquidity but limit crypto market volatility.
  • Bankman-Fried disputes insolvency claims, alleging trial bias and political targeting.

FTX has begun distributing funds to eligible creditors, marking a significant step in its bankruptcy process. However, several creditors from restricted jurisdictions remain excluded from these payments. Besides, former CEO Sam Bankman-Fried continues to challenge the narrative surrounding FTX’s downfall, making controversial claims about the company’s financial standing and his trial.

Creditors in Restricted Jurisdictions Face Delays

According to FTX creditor Sunil, a substantial number of claims originate from regions currently ineligible for payouts, including China, Russia, Egypt, Nigeria, and Ukraine. Among these, China holds the largest portion, representing 8% of FTX’s customer base. The exchange is reviewing potential options for these creditors, but no clear resolution has been outlined.

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FTX Claims

A lot of claims are from Jurisdictions not eligible for FTX distributions at the moment which include:

Russia, China, Egypt, Nigeria, Ukraine

FTX is reviewing options

China is the largest with 8% of customers pic.twitter.com/Ts1iToqhAL

— Sunil (FTX Creditor Champion) (@sunil_trades) February 21, 2025

The ongoing distributions primarily benefit small creditors with claims of $50,000 or less. These individuals are set to receive full repayment, along with a 9% annual interest rate, potentially amounting to a 119% fiat-valued reimbursement. 

Today FTX Repayments: Claims <$50k
1st Distribution: 18 Feb 2025, 10am ET

Claims < $50k: $1.2bn (120.5%)
~ $800m out of $1.2bn to be paid
~ 162k out of 460k est. allowed claims

Approx.
50% Original Holders: $400m
50% Claim buyers: $400m

— Sunil (FTX Creditor Champion) (@sunil_trades) February 18, 2025

In this round, approximately $800 million has been disbursed, covering 162,000 accounts. This accounts for 35% of the estimated 460,000 eligible claims. However, larger claims exceeding $50,000 will not be addressed until after May 30.

Settlement in Fiat Currency Could Impact Crypto Markets

The first phase of FTX’s repayment plan is expected to distribute between $6.5 billion and $7 billion, with the current round of payments scheduled to continue until March 4. However, FTX has not disclosed the exact amount allocated for this initial phase.

Since the exchange is settling claims in fiat currency rather than cryptocurrency, the market may not experience significant volatility from these payouts. On the contrary, the influx of funds to creditors could introduce new liquidity into the market. Consequently, this could contribute to increased trading activity, as some recipients may reinvest in digital assets.

Bankman-Fried Challenges Bankruptcy Narrative

Meanwhile, Sam Bankman-Fried, serving a 25-year prison sentence for fraud, is making a last-ditch effort to reshape public perception of FTX’s collapse. He insists the company was never insolvent and claims there were sufficient assets to reimburse customers in full as early as November 2022. Furthermore, he accuses the bankruptcy team of intentionally misleading the public regarding FTX’s financial state.

According to Bankman-Fried, initial reports suggested the company held only $1 billion in assets, but subsequent findings revealed approximately $15 billion. He argues that this discovery proves FTX was not bankrupt and that the delays in repayments were unnecessary. However, many in the crypto community remain skeptical, pointing to FTX’s connections with Alameda Research and the mismanagement of customer funds.

Allegations of Political Targeting and a Rigged Trial

In addition to defending his actions, Bankman-Fried has taken an aggressive stance against the U.S. Department of Justice and Judge Lewis Kaplan. He claims his trial was politically motivated and unfairly influenced in favor of the prosecution. Moreover, he argues that his defense was prevented from countering misleading claims made in court, which ultimately shaped the jury’s perception of the case.

His recent statements have sparked further controversy, particularly his apparent shift in political allegiance. Previously associated with Democratic Party donations, Bankman-Fried now appears to be aligning with former President Donald Trump. Reports suggest his parents have been actively lobbying for a presidential pardon.

Tags: FTX NewsMarket News

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