FTX creditor Sunil reveals a gap in bankruptcy claims jurisdiction coverage

Sunil Kavuri, the FTX creditor activist, today announced that some jurisdictions were not eligible for FTX claim distributions via custodial exchanges due to restrictions in those countries. Kavuri pointed out that the FTX bankruptcy trustee was currently seeking ways to delegate claim repayments in each jurisdiction, including Russia, China, Nigeria, Ukraine, and Egypt.

Kavuri shared a detailed ‘FTX global customer distribution’ pie chart from the November 2022 bankruptcy hearing that identified China as the largest jurisdiction not qualified for FTX claim distributions with about 8% of the global customer base. On January 17th, Kavuri claimed that FTX creditors from countries such as Egypt, Iran, Nigeria, Ukraine, China, Russia, and Saudi Arabia could not receive their claims through the custodial exchanges BitGo and Kraken. In total, Kavuri highlighted over 20 countries that were excluded from payouts handled by Kraken and BitGo.

According to Kavuri, regulatory hurdles and cross-border payment issues were likely key factors behind those restrictions, although the exact reasons for each country were not clear. The FTX creditor group representative had previously predicted that the first repayment would begin in February. FTX creditors on Kraken with claims under $50,000 confirmed on Tuesday via Reddit that refunds had started landing in their accounts.

FTX creditor raises concerns over jurisdictional exclusions

FTX Claims

A lot of claims are from Jurisdictions not eligible for FTX distributions at the moment which include:

Russia, China, Egypt, Nigeria, Ukraine

FTX is reviewing options

China is the largest with 8% of customers pic.twitter.com/Ts1iToqhAL

— Sunil (FTX Creditor Champion) (@sunil_trades) February 21, 2025

FTX creditor Kavuri said that crypto investors from nearly 26 countries, including Egypt, Iran, Nigeria, Ukraine, China, Russia, and Saudi Arabia, were not currently eligible for distribution with BitGo and Kraken despite FTX recognizing that the creditors may have accounts with both custodial exchanges. The bankrupt FTX exchange previously estimated that it owed creditors around $11.2 billion. 

FTX said in October 2024 that it had recovered between $14.7 billion and $16.5 billion in assets for distribution. As of November 2022, when the exchange collapsed, almost 98% of FTX creditors under the plan approved by Delaware bankruptcy Judge John Dorsey were set to receive 119% of their allowed claims.

The FTX customer portal published an updated listing of the available ‘Distribution Service Providers’ based on country of residence with brief descriptions of the offerings each country provided. All creditors were required to complete their KYC (Step 3) and Tax Compliance (Step 7) prior to selecting and onboarding with a Distribution Service Provider. Additional Distribution Service Provider options that became available over time will be updated accordingly as per FTX. Importantly, customers were not allowed to split their claim distributions across multiple Distribution Service Providers or make changes when selections were made.

FTX sets aside $1.2B to start refunding customers in February

Kavuri tracked the refunding process and revealed that the FTX exchange had already paid out $800 million from the $1.2 billion round of distributions. He added that 162,000 accounts, representing 35% of the 460,000 eligible claims, had received payments so far. The refund money was split evenly, with 50% going to original FTX account holders, while the other half went to debt buyers who scooped up claims at steep discounts. Payments were processed through BitGo and Kraken, and the recipients were to receive funds in their accounts between one to three business days.

Kavuri earlier revealed that FTX had set aside $7 billion for this phase of distributions with an eventual target of $17 billion in total refunds. However, the FTX Creditor Recovery Summary estimated that total claims across all creditor groups summed up to $11.75 billion, and recovery rates would depend on the type of claim. According to the estimates, secured and customer claims saw recoveries between 100% and 142%, while overall recovery rates ranged between 123% and 138%.

FTX said it would repay convenience class creditors within 60 days of the court-approved reorganization plan, suggesting that they could receive payouts on or before March 4, 2025. Convenience class creditors account for approximately 90% of all eligible creditors on FTX.

“Our work is not over — we intend to continue our recovery efforts and return funds to additional claim classes.”

–John J. Ray III, plan administrator of the FTX Recovery Trust

Kavur also noted that creditors must verify their claims by the record date of April 11th to qualify for the next distribution in May. FTX estimated that the total value of refunds scheduled for the May distribution will range between $14.5 billion and $16.3 billion.

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