Defunct Cryptocurrency Exchange FTX Encounters Ineligible Jurisdiction Claims as it Begins Repaying Creditors

On Feb. 18, the bankrupt exchange initiated its first round of repayments. Those who lost up to $50,000, classified by the exchange as the “Convenience Class,” were expected to receive 100% of their claims plus 9% annual interest based on their holdings.

Bankrupt cryptocurrency exchange FTX is facing issues with ineligible jurisdiction claims as it begins repaying creditors who lost funds in the high-profile bankruptcy case.

On Feb. 18, the bankrupt exchange initiated its first round of repayments. Those who lost up to $50,000, classified by the exchange as the “Convenience Class,” were expected to receive 100% of their claims plus 9% annual interest based on their holdings.

While the repayments mark a significant step in the crypto industry’s recovery, FTX now faces claims from restricted jurisdictions. On Feb. 21, FTX creditor and advocate Sunil Kavuri shared a list of countries ineligible for claims, including Russia, China, Egypt, Nigeria, and Ukraine.

Kavuri said there were many claims from countries “not eligible for FTX distributions.” The FTX creditor and advocate added that the bankrupt exchange was already reviewing its options.

FTX schedules the next payment distributions in May

In its Feb. 18 announcement, FTX said its next repayment distribution date will be May 30. This round will cover “Class 5 Customer Entitlement Claims and Class 6 General Unsecured Claims.” These are users who had assets on the exchange when it collapsed. It also includes other creditors, such as trading partners and vendors.

To qualify, creditors must verify their claims by April 11. Kavuri added that the May repayment round will cover claims exceeding $50,000, and creditors must select their distribution agent by the same deadline.

Former FTX CEO Sam Bankman-Fried aims for pardon

While FTX creditors navigate the complexities of the repayment process, former FTX CEO Sam “SBF” Bankman-Fried's parents are attempting to secure a pardon for him from U.S. President Donald Trump.

On Jan. 30, Bloomberg reported that SBF’s parents met with lawyers and other figures close to the Trump administration to gauge the possibility of clemency for their son, who in March 2024 was sentenced to 25 years in prison.

Following the clemency push, SBF made favorable comments about the Republican Party and criticized the Democratic Party. Despite donating to the Biden administration and the Democratic Party before the 2020 election, SBF said he was left frustrated and disappointed by them.