Selling FTX claims through third-party platforms has become the main way for Chinese users to recover funds.
Author:Golem
Original:Odaily
Cover:Photo by Mariia Shalabaieva on Unsplash
On July 1, FTX creditor representative Sunil updated the compensation situation:
- On February 18, 2025, users with amounts less than $50,000 will receive 120% compensation;
- On May 30, 2025, users with amounts over $50,000 will receive 72.5% compensation, while users with amounts less than $50,000 will receive 120% compensation;
- Future expected compensation dates are October and December 2026, and 2027;
- Users with amounts over $50,000 who have received 72.5% compensation will subsequently receive 27.5% face value compensation, achieving 100% compensation. (Note: Based on compensation conditions, the interest rate for FTX creditors after claiming compensation is approximately 40-80%.)
Just as creditors were preparing to wait for their compensation, FTX's claim process has encountered another twist.
On July 4, FTX creditor representative Sunil posted on X platform, stating that creditors from 49 jurisdictions, including China, may lose their claim rights. The claim funds from these regions account for 5% of total funds, approximately $825 million (based on total compensation assets of $16.5 billion), with 82% belonging to Chinese creditors, representing claim assets worth about $676.5 million.
Simultaneously, Sunil stated that FTX will seek legal advice to distribute to restricted foreign jurisdictions. However, if a user is confirmed to be from a restricted foreign jurisdiction, the claim will be controversial. Users have 45 days to raise objections, but if the issue remains unresolved, users will completely lose their distribution rights, and their compensation share will be confiscated and returned to the FTX liquidation trust for distribution to creditors from other legal jurisdictions.
In fact, when FTX officially began compensating users with amounts less than $50,000 on February 18, it indicated that five regions - China, Russia, Egypt, Nigeria, and Ukraine - were temporarily unable to participate in claim distribution, with Chinese users being the most numerous, accounting for 8% of total FTX users.
At the time, affected users might have believed that the claim restrictions were temporary and that FTX could propose a solution. However, today's announcement has expanded the restricted regions and the statement almost pronounces a death sentence on the claim rights of creditors from restricted regions.
Regarding FTX's approach, the anger of affected users can no longer be suppressed. User @zhetengji stated that they have contacted a lawyer in New York and called for more people to take action:
I will definitely take action and raise objections at every stage. I also hope more people will stand up. We cannot just sit and wait - this is absolutely unreasonable. Although mainland China does not support cryptocurrency trading, mainland Chinese residents are allowed to hold cryptocurrencies. The law recognizes the commodity attributes of virtual currencies. The claim process uses US dollars for settlement. Despite foreign exchange controls limiting the amount of US dollars mainland Chinese residents can receive annually, they are allowed to hold US dollars overseas.
How Should Chinese Creditors Pursue Their Claims?
Pursuing legal action requires considering costs and benefits. For large creditors who lost tens or hundreds of millions of dollars on FTX, the cost and benefit of legal action might be proportionate. However, for users with amounts less than $50,000, the claim funds compared to the money and time spent on legal channels seem not worthwhile.
Does this mean watching their money flow into others' pockets? Of course not. In fact, there are already many third-party platforms offering FTX claim sale services, such as RootData, claims market, ftxcreditor, and Xclaim. To better understand how FTX Chinese creditors can "pursue their claims," Odaily consulted Loners Liu, FTX claim solution lead at RootData:
RootData's main business is a financing information platform, and it also provides FTX claim sale services for Chinese users. Currently, they have successfully handled 1000+ cases, assisting in claim processing of over $300 million. Loners Liu said: "You can think of us like a real estate agency. We help Chinese creditors sell their claims at a discounted price (one-time sale, not in batches), or help them manage their claims."
RootData currently charges a 1-2% service fee for this service, and its solutions for helping Chinese users handle FTX creditor claims mainly include the following four options:
- Selling the claim;
- Transferring the claim to an entity outside China;
- Transferring the claim under the name of a trustee, bank, or other entity outside China;
- Changing residence;
If selling the claim, users first need to log in to claims.ftx.com to confirm KYC, then both buyer and seller need to schedule a video conference, log in to the backend to verify and sign the contract, and finally complete the transfer.
"Previously, some people were hesitant about actively handling their claims, but after news spread about Chinese users being restricted in FTX claim claims in recent days, many have come to consult," Loners Liu said while answering my questions and responding to messages from creditors.
"However, based on our estimates, among Chinese creditors, users with amounts exceeding $50,000 might be only around 1,000", Loners Liu stated that many large clients have actually already processed their claims through various channels.
From the perspective of affected users, waiting for years without receiving money is like a bolt from the blue, and the 45-day appeal period and cross-border claim rights, coupled with their frustratingly inefficient handling, deliver another blow. At this moment, being able to recover part of the funds by accepting some loss (claim transfer rate plus a small service fee) seems to be the best option among bad choices.
And if strictly adhering to legal principles and rights protection, facing bankruptcy lawyers charging astronomical fees and holding rule-making power, Chinese creditors are left with little leverage. In the ever-changing crypto world, the FTX collapse seems distant, but the wounds for all parties remain unhealed. The most unbearable scene is seeing the cryptocurrency that once carried wealth dreams ultimately turning into dollars entering the legal team's pockets.
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