FTX Recovery Trust Freezes Payments in Restricted Jurisdictions

FTX Recovery Trust has stopped payments to creditors in 49 restricted jurisdictions as of its July 2025 court filing.

The event highlights challenges in repaying creditors under legal restrictions, affecting trust and market dynamics.

FTX Recovery Trust, tasked with redistributing funds post-bankruptcy, halted payments to creditors in specific regions. Payment suspensions affect 49 jurisdictions, with China handling 82% of impacted claims. Legal reviews determine eligibility for these funds.

The suspension involves FTX Recovery Trust, established after FTX’s bankruptcy, working within court directions. Payouts are stopped pending legal confirmation in regions such as China, Nigeria, and Pakistan which collectively claim significant portions of the $16.5 billion repayment plan.

The pullback influences individual creditors and broader market sentiment. Creditor representatives express concern for payments frozen by jurisdiction, highlighting risks for those involved in lengthy legal reviews. Institutional and minor retail claimants are affected by the staggered payment process.

The trustee has the last word. The worst case, he said, is that claimants may have to sell or assign their claims to someone in a permitted jurisdiction. — Sunil Kavuri, Creditor Advocate, FTX Recovery Trust

Stakeholder concerns include financial impacts on receiving entities and loss of funds back to FTX Trust. Legal deviations underscore compliance challenges in transnational fund disbursements, affecting policy settings.

Potential outcomes include prolonged legal processes influencing funds’ timelines. The situation emphasizes regulatory challenges in cross-border bankruptcy cases, requiring careful legal navigation and clarity for stakeholders in restricted nations.