Progress on FTX Bankruptcy Case Compensation and Challenges Faced by Users in Some Countries

In 2022, the collapse of the cryptocurrency exchange FTX shocked the entire industry. Now, after more than two years of bankruptcy restructuring, FTX's compensation plan has finally begun to be implemented. On the 18th of this month, the first round of compensation officially started, prioritizing users with claims under $50,000. These users account for 98% of the total and will receive about 119% cash compensation based on the cryptocurrency prices from November 2022. According to reports, the first batch of $800 million has been distributed to 162,000 accounts, and the remaining funds will also be allocated gradually.

However, just as the compensation process seemed to be going smoothly, FTX creditor representative Sunil released a disturbing message. He stated that users from China, Russia, Ukraine, Egypt, and Nigeria would be unable to participate in this bankruptcy distribution. This decision has raised widespread concern, particularly considering that users from mainland China account for 8% of the platform's total user base, involving a large number of people and significant amounts of money.

There is currently no official explanation for the reasons behind this decision. However, from a legal and financial regulatory perspective, there may be several factors at play:

1. Jurisdiction and compliance risks: China, Egypt, and Nigeria have adopted a prohibitive regulatory model for virtual assets. This means that virtual currency-related activities are considered illegal financial activities in these countries. If FTX compensates users from these countries, it may face significant compliance risks.

2. International Financial Sanctions: For Russian users, the main obstacle may come from the sanctions imposed on the SWIFT system. Since February 2022, major Russian banks have been excluded from the SWIFT system, making cross-border fund transfers extremely difficult.

3. Wartime Financial Control: Ukraine is currently implementing strict wartime financial control policies, with large cross-border capital flows being heavily restricted. This may be the main reason FTX is unable to compensate Ukrainian users.

Although the current situation is not optimistic, there is still hope for users in mainland China for the future. The FTX liquidation team may consider establishing special liquidation channels or exploring the possibility of using stablecoins for online compensation. However, these solutions need to overcome significant regulatory and compliance challenges.

Under the current circumstances, all that users in mainland China can do is patiently wait. Solving this complex issue requires coordination and cooperation among regulatory agencies from various countries, as well as adjustments to the international financial regulatory framework. Although the road is long, with the continuous development of the cryptocurrency industry and the gradual improvement of the regulatory environment, a solution that balances compliance and user rights may eventually be found.