FTX drops ‘restricted countries’ motion but warns it may refile

The bankruptcy estate of the now-defunct crypto exchange FTX has dropped its bid to limit payouts to creditors in certain “restricted foreign jurisdictions.”

On Monday, the FTX Recovery Trust filed a notice withdrawing its request to implement special procedures for jurisdictions such as China, which had been flagged as potentially restricted under the confirmed bankruptcy plan.

“If and when the FTX Recovery Trust seeks to renew the relief requested in the Motion, the FTX Recovery Trust shall file a motion and provide notice in accordance with the applicable rules,” the notice states, adding that the motion has been withdrawn without prejudice.

The trust filed the motion in early July, seeking the court’s authorization to freeze payouts to creditors in 49 countries such as China, Saudi Arabia, Russia and Ukraine, citing unclear or restrictive local crypto laws.

Do not celebrate too early, creditor warns

The withdrawal is a significant win for affected FTX creditors, but some say it’s too early to celebrate.

“This is a victory for all potentially affected creditors. But until you receive the compensation you’re owed, stay vigilant and keep acting together,” Weiwei Ji, a creditor known as Will on X, wrote in a post on Tuesday.

The estate’s decision to withdraw the motion came after intense pushback from creditors, with at least 70 objections filed in bankruptcy court within weeks of the motion’s submission.

Amid the objections in July, Ji warned that court approval of the FTX estate’s motion regarding restricted countries could have set a standard for future crypto bankruptcies.

Related: Bankman-Fried says his biggest mistake was handing FTX to new CEO before bankruptcy

“This motion isn’t just about FTX creditors. It sets a dangerous precedent that could destroy trust in the global crypto ecosystem,” he wrote at the time.

Sunil Kavuri, a prominent FTX creditor representative, warned on Sunday that the value of FTX distributions may be far less than expected by many, given that the payouts are made in fiat rather than cryptocurrencies.

“FTX creditors are not whole,” he wrote, adding that the FTX estate’s planned 143% fiat repayment doesn’t reflect losses in crypto-denominated terms.