Opinion: The Seizure of Chinese Users’ FTX Claims Due to Crypto Ban Lacks Legal Basis; FTX Claims Are Denominated and Settled in US Dollars

On July 6, Chinese crypto KOL @zhetengji shared his views on the issue of “a certain exchange’s creditors claiming that Chinese users’ compensation funds may be confiscated,” stating: “The claims against this exchange are denominated and settled in US dollars, and the compensation distribution phase has already begun. This has nothing to do with cryptocurrency regulation. There is no legal risk for Chinese citizens to receive compensation in US dollars. The Recovery Trust’s motion from this exchange has lacked legitimate legal grounds from the very beginning. In addition, in the bankruptcy case of this exchange, which is also a US-based crypto company, compensation was paid to creditors via bank wire transfer, and Chinese creditors received their payments smoothly.” @zhetengji believes that the exchange can compensate Chinese creditors in the same way. Previously, it was reported that Sunil, a creditor representative of the exchange, posted on social media that 82% of the claim funds in restricted countries belonged to Chinese users, but currently, crypto trading is not allowed in China and there are no authorized distributors. According to documents provided by Sunil, the exchange will seek legal advice; if it is possible to distribute to potential restricted foreign jurisdictions, it will do so. If it is determined that residents belong to restricted foreign jurisdictions and claims become disputed, the distribution may be subject to confiscation.