FTX Bankruptcy Compensation Plan Launched, Some Users Face Inability to Claim Compensation

Since the collapse of the FTX exchange in 2022, this has been the largest bankruptcy liquidation case in the history of cryptocurrency, attracting the attention of global investors. After more than two years of bankruptcy restructuring, the FTX compensation plan has finally entered the execution stage.

On the 18th of this month, the first round of compensation officially started. According to the established plan, users with convenience claims below $50,000 will be prioritized to receive cash compensation calculated at approximately 119% based on the cryptocurrency price in November 2022. This type of user accounts for 98% of the total. Recent reports indicate that the first batch of $800 million has been paid to 162,000 accounts, and the remaining funds will be distributed gradually.

However, just as the compensation work was proceeding smoothly, the FTX creditors' representative issued a statement indicating that users from five countries, including China, Russia, and Ukraine, would be unable to participate in the bankruptcy distribution. This decision has attracted widespread attention, especially 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.

Regarding the reasons for not being able to participate in the allocation, no official explanation has yet been given. However, 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. If FTX compensates users in these countries, it may contradict local regulatory policies, facing significant compliance risks.

2. International Financial Sanctions: Russia has been removed from the SWIFT system due to the international situation, resulting in difficulties in cross-border fund payment and settlement. Even if the FTX liquidation team wishes to compensate Russian users, it will be difficult to resolve the fund payment issue in the short term.

3. Financial Controls During Wartime: Ukraine has implemented strict financial control policies due to the war, and the approval of large cross-border fund transfers is basically at a standstill, which directly affects the possibility of FTX compensating Ukrainian users.

For Chinese users, there is still a glimmer of hope. In the future, the FTX liquidation team may consider establishing special liquidation channels with countries that adopt prohibitive regulatory models, or using stablecoins for online compensation. However, these solutions still face compliance risks and require collaboration and breakthroughs in the regulatory frameworks of various countries and international financial regulations.

Overall, the only thing users in mainland China can do right now is wait. Building a special clearing channel takes time and effort from all parties involved, but it remains a possible solution. In contrast, users in Nigeria may face an even bleaker prospect of obtaining compensation due to the country's complex financial environment.