FTX Withdraws Restricted Jurisdiction Motion, China Creditors Gain Equal Claims
FTX Recovery Trust has withdrawn its controversial motion to implement restricted jurisdiction procedures targeting creditors from 49 regions, including mainland China and Macau. The July motion sought to classify these jurisdictions as potential legal barriers and potentially divert $400–500 million in assets—83.8% held by Chinese creditors—into a trust fund. After strong opposition led by Chinese creditors and critical feedback at an October 23 hearing by Judge Owens in the Delaware Bankruptcy Court, the trust unconditionally withdrew the motion on November 3, 2025. This decision restores equal claims rights for all creditors and paves the way for the upcoming third distribution round, valued at roughly $1.6 billion. Past precedents, such as payouts in the Celsius bankruptcy, suggest that Chinese creditors can receive US dollar payments via channels like Hong Kong. While this represents a significant legal victory, final payouts depend on the court’s ultimate approval and future procedural developments in the FTX bankruptcy case.
Bullish
The withdrawal of the restricted jurisdiction motion by the FTX Recovery Trust marks a critical de-risking event in the FTX bankruptcy proceedings. By restoring equal claims rights, the decision reduces legal uncertainties for creditors, especially in China, and paves the way for smoother asset distributions. This clarity is likely to boost confidence among investors and creditors awaiting payouts. Historically, similar legal resolutions, such as positive rulings in the Celsius bankruptcy, have led to recoveries without major market disruptions. In the short term, traders may view this as a positive signal, prompting reduced volatility around FTT and related crypto assets. Over the longer term, enhanced legal clarity in large bankruptcy cases can support broader market stability, reinforcing faith in the resolution framework for distressed crypto projects. Therefore, the overall impact is bullish.