FTX may refuse to pay out $800 million in compensation to customers in 49 countries

What’s new? The managers of the bankrupt crypto exchange FTX have petitioned a US court to reconsider the payment of compensation to clients in 49 countries, including Russia, Belarus, Ukraine, China, Saudi Arabia, and Pakistan. Customer claims in these countries total $800 million, or 5% of the total $16 billion in compensation. China accounts for 82%, or $656 million.

Source: X.com

What else is known? The initiative involves hiring local lawyers to assess the feasibility of distributing compensation in these countries from a legal perspective. If the possibility is confirmed, FTX will continue distribution through payment service providers.

Otherwise, the exchange will notify affected creditors and ask the court to rule that making payments in the country is not possible. Creditors will have 45 days to object to such a ruling.

If no objections are filed or are overruled, distributions intended for customers in such jurisdictions will be forfeited and returned to FTX for redistribution.

The exchange’s representatives explained that cryptocurrencies are banned in a number of countries, and this may prevent the payment of compensation. However, the exchange “continues to make efforts to reduce the number of countries on this list of jurisdictions and may remove jurisdictions if the legal situation is clarified.”

A court hearing on the proposal is scheduled for July 22. If approved, FTX will engage lawyers, issue notices, and begin resolving objections, while continuing the global processing of compensation claims.

In June, FTX added Payoneer as a third-party distributor for lenders in 93 jurisdictions. However, some users wrote to X that their countries were still not covered despite the addition of Payoneer.

Also, last month, FTX lawyers called the $1,53 billion claim by liquidators Three Arrows Capital baseless, saying the hedge fund’s losses were the result of its own risky trading strategy.

In late May, FTX announced the start of the second phase of the distribution, paying out more than $5 billion to creditors who met the required preconditions.

That same month, Binance went to court to dismiss FTX’s $1,76 billion claim.