The defunct crypto exchange has dropped its motion initially filed in July to restrict repayments to 49 countries in “restricted foreign jurisdictions,” citing “unclear, inconsistent, or restrictive crypto laws” as reasons for the proposed limitations.
On July 4, the platform filed a motion proposing a freeze on compensation for users from restricted jurisdictions, including an extra clause for an “immediate annulment” of claims in these jurisdictions.
The motion also proposed the appointment of local lawyers to evaluate the feasibility of compliant payments, a 45-day period to contest the restrictions, and the annulment and forfeiture of unresolved claims to be returned to the allocation trust.
However, later in the same month, the court rejected the annulment claim during a hearing. The decision was also strongly opposed by 300 Chinese creditors, who argued that the exchange had no legal grounds to include China in the list of such jurisdictions.
Repayments officially commenced in March 2025 and have been disbursed in two rounds of compensation: $1.2 billion and $5 billion. The claims of the ‘restricted’ countries approximately total over $800 million, accounting for 5% of the total claims of $16 billion. China takes the lead, accounting for 82% of that value.
FTX Withdraws Motion After Pushbacks.
After intense backlash from creditors, with over 70 objections filed against the restrictive motion within weeks of submission, the platform decided to withdraw the motion.
The dismissal of the earlier filed motion seeking the court’s authorization to freeze payments against 49 countries, including African countries like Nigeria, Zimbabwe, and Egypt, was confirmed by Sunil Kavuri, a representative of the platform’s largest creditor group.
The withdrawal was filed without prejudice and may be refiled at a later date.
‘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.
Meanwhile, convicted FTX founder Sam Bankman-Fried reiterated his claim that FTX and Alameda Research were “never insolvent.” He argues that the firm’s financial status was misrepresented, which fuelled panic and triggered its collapse in 2022.
What This Means for African Creditors?
African creditors were among the most severely impacted by the bankruptcy, as FTX had processed over a billion transactions, acquired more than 100,000 customers, and built partnerships across the region. The reversal marks a major win for these affected creditors.
The withdrawal of the motion means that the affected countries have now joined the list of other eligible countries to receive a share of the $16 billion repayment trust. However, the repayments are being made in fiat currency, not the original cryptocurrency tokens, so their value may be less than expected.
As noted in the withdrawal notice, the decision is not permanent and may be revisited by the platform.
One of the affected creditors, Weiwei J, known as Will on X, had remarked, ‘This is a victory for all potentially affected creditors. But until you receive the compensation you are owed, stay vigilant and keep acting together.’
While it may be a time for celebration for African creditors, amongst others, it remains a period to be watchful and keep abreast of future legal developments.
