FTX’s Payout Freeze Hits 49 Countries Including China, Nigeria, and Russia Due to Legal Restrictions

FTX Freezes Billions In Payouts Across 49 Countries Amid Legal Uncertainty

The FTX Recovery Trust has paused all creditor payouts in 49 jurisdictions where cryptocurrency activities face heavy restrictions or outright bans.

This decision, revealed in a court filing dated 2 July 2025, primarily impacts users in countries such as China, Nigeria, Fiji, Andorra, and Zimbabwe.

Although claims from these regions account for just 5% of the total number of filings, an overwhelming 82% of the frozen funds belong to users in China, revealing the scale of the hold-up.

Why Are Payouts Blocked For Users In These Regions

The pause stems from legal concerns over whether distributing funds in these countries would violate local laws.

To navigate this, FTX has adopted a “hold-and-review” approach, treating all claims from the restricted jurisdictions as “disputed.”

No payments will be released until external legal experts give a clear green light confirming compliance with each country’s regulations.

Once this process is cleared by the court, affected creditors will receive a “Restricted Jurisdiction Notice,” explaining the reasons for the delay and providing a minimum 45-day window to file objections.

How Are Creditors Responding To The Freeze

Among those affected, Chinese creditor Will的折腾纪 (@zhetengji) has publicly announced legal action.

He has already hired a New York-based lawyer and plans to contest FTX’s decision at every stage.

Will questions the fairness of the freeze, saying:

“People are still allowed to hold crypto and U.S. dollars overseas. Since FTX settles claims in USD, why aren’t wire transfers allowed?”

He has called on other affected users to stand up and challenge the move.

Disputed Claims Are Slowly Being Cleared

FTX has reported some progress on disputed claims.

The total value under dispute has dropped from $6.5 billion to $4.6 billion after approving around $1.8 billion in claims.

Another $2.7 billion is anticipated to be cleared soon, bringing the total approved claims to $8.3 billion.

Despite this, billions remain in legal limbo, creating ongoing uncertainty for many creditors.

How Will This Impact Handling of International Crypto Claims

FTX’s request to the US bankruptcy court outlines a unique plan for handling claims from countries where crypto is restricted or banned.

The company stresses that paying out to these jurisdictions without legal clearance could expose the bankruptcy estate to significant legal risks.

Alongside China, the list of affected countries includes Russia, Nigeria, Saudi Arabia, and Egypt, among others, where strict crypto laws or the absence of licences block straightforward payouts.

Experts note that the court’s ruling on this matter may set a precedent for how future international crypto bankruptcies manage cross-border claims under differing legal frameworks.

This case highlights the difficulties of balancing global asset recovery with local legal restrictions.

What Can Creditors Do While Waiting

Similar to past crypto bankruptcies like Mt. Gox, delays caused by local regulatory restrictions can drag on for years.

While some creditors have eventually recovered funds, the process remains slow and fraught with legal obstacles.

Sunil Kavuri, an advocate for FTX creditors, stresses the need for affected users to seek legal advice without delay.

He urges those in restricted jurisdictions to make use of the 45-day objection period to contest their status or consider transferring their claims to jurisdictions where payouts are permitted.

Kavuri highlights that legal guidance is essential before any distributions can move forward.

Meanwhile, John J. Ray III, CEO of FTX Debtors, leads efforts to navigate this complex legal landscape as creditors await clarity.