FTX Bankruptcy Compensation Plan Initiated, Some Country Users Face Exclusion

FTX was once a benchmark in the cryptocurrency market, but its eventual collapse became one of the largest bankruptcy cases in cryptocurrency history. After more than two years of bankruptcy restructuring, the FTX compensation plan has finally entered the execution phase.

On the 18th of this month, the first round of compensation officially commenced. According to the plan, users in the convenience category with claims below $50,000 will be prioritized to receive cash compensation calculated at approximately 119% based on the cryptocurrency price in November 2022. This category of users accounts for 98% of the total user base. Currently, the first batch of $800 million has been distributed to 162,000 accounts, and the remaining funds will be allocated in due course.

However, the creditors' representative of FTX stated that users from five countries, including China, Russia, and Ukraine, cannot participate in the bankruptcy distribution. Among them, users from mainland China account for 8% of the platform's total user base, involving a large number of people and significant amounts.

As for the reasons for excluding compensation, there has not yet been an official statement. From a legal and financial regulatory perspective, the following factors may exist:

1. Jurisdictional Barriers and Compliance Risks: China, Egypt, and Nigeria have adopted prohibitive regulatory models for virtual assets. These countries define virtual currency-related activities as illegal financial activities, which are not protected by law. If FTX compensates users in these countries, it may contradict local regulatory policies and face significant compliance risks.

2. SWIFT Sanctions and Wartime Financial Controls: Russia has been removed from the SWIFT system due to international sanctions, resulting in difficulties in cross-border payment and settlement. Ukraine, on the other hand, is experiencing a standstill in the approval of large cross-border fund movements due to wartime financial controls, affecting the possibility of compensation.

For users in mainland China, there may be hope for compensation in the future through special clearing channels or online compensation with stablecoins. However, these plans still require cooperation and breakthroughs from various countries and international financial regulatory frameworks. Currently, the only thing users in mainland China can do is patiently wait.