FTX Withdraws Controversial Motion on ‘Problematic’ Countries: What We Know So Far

FTX has withdrawn its controversial motion to restrict payments to users from 49 countries, including Russia and Ukraine. The move follows backlash from international creditors and ongoing legal scrutiny in the company’s bankruptcy proceedings.

The withdrawal was confirmed by Sunil Kavuri, a representative of FTX’s largest creditor group. However, court documents indicate that the exchange may refile the motion with revisions in the future.

FTX’s Controversial Motion Explained

The motion, first proposed in July 2025, sought to suspend compensation to users from jurisdictions deemed “problematic” due to unclear or restrictive cryptocurrency regulations. It covered 49 nations, with 5% of total user claims—around $16 billion—linked to these countries.

China accounted for the largest share of asset value, estimated at $380 million, representing roughly 82% of the total amount. The proposed plan also included appointing local legal representatives, implementing a 45-day appeal period for affected users, and annulling unauthorized claims.

During a July 22 hearing, a U.S. bankruptcy court rejected the clause calling for “immediate annulment” of claims. Over 300 Chinese creditors opposed the plan, arguing that FTX had no valid legal basis to classify China among restricted jurisdictions.

The withdrawal suggests that FTX’s restructuring team is reconsidering its strategy amid pressure from creditors and regulators. While the document allows the option to resubmit, any new filing would likely require major revisions to pass judicial scrutiny.

 

Sam Bankman-Fried’s Appeal Moves Forward

Meanwhile, a separate hearing is set for November 4 in New York’s Second Circuit Court of Appeals, where lawyers for FTX founder Sam Bankman-Fried (SBF) are contesting his 25-year prison sentence.

Bankman-Fried, convicted on seven counts of fraud and conspiracy, has argued through his defense team that the verdict resulted from “hasty conclusions” by the press, prosecutors, and the presiding judge, Lewis Kaplan. The appeal accuses the court of procedural imbalance favoring the prosecution.

The defense cited several key issues, including alleged bias in the judge’s comments, improper jury guidance, and the exclusion of evidence showing that FTX held sufficient assets to cover liabilities. They also challenged the $11 billion restitution order against SBF, emphasizing a lack of malicious intent.

At the end of October, Bankman-Fried publicly maintained that FTX was solvent at the time of its collapse and denied misappropriation of customer funds.

What This Means for FTX Creditors

The withdrawal of the motion is a temporary relief for affected creditors, particularly in countries that were on the restricted list. It could allow FTX’s bankruptcy administrators to focus on broader settlement processes without facing additional jurisdictional disputes.

Still, with a possible refile and an ongoing appeal by SBF, the overall outcome of FTX’s restructuring remains uncertain. The case continues to set legal precedents for how global crypto exchanges handle cross-border insolvency and user compensation in complex regulatory environments.

As the FTX bankruptcy unfolds, the withdrawn motion underscores ongoing tensions between compliance, global regulation, and investor restitution in the cryptocurrency sector.

FYI (keeping you in the loop)-

Q1: What was the FTX controversial motion about?

It aimed to block compensation for users in 49 countries with unclear or restrictive crypto laws, including Russia, Ukraine, and China.

Q2: Why did FTX withdraw the motion?

Due to creditor opposition and court rejection of certain clauses, FTX decided to withdraw and potentially revise the plan.

Q3: What’s next for FTX?

The company may file a revised motion later, while continuing efforts to return assets to creditors worldwide.

Q4: What is Sam Bankman-Fried appealing?

He is appealing his conviction and 25-year sentence, claiming judicial bias and procedural unfairness during the trial.

Q5: How much money is involved in FTX’s bankruptcy?

The total claims are around $16 billion, with a significant portion linked to Chinese creditors.