China's creditors react to FTX's proposed payments block

• Creditors challenge FTX motion in US court
• Cryptocurrencies are considered personal property in China.
• FTX proposal affects payments in 49 countries

A group of creditors, led by Weiwei Ji, has filed a legal challenge to the FTX estate's motion to suspend payments to residents of countries with legal restrictions on cryptocurrency transactions. According to a document filed with the U.S. Bankruptcy Court in Delaware, Ji claims to represent more than 300 Chinese creditors, despite currently residing in Singapore. His Chinese passport was the criterion used to classify him as a Chinese creditor.

In his objection, Ji argues that payments made by FTX are denominated in US dollars, a widely accepted currency that is beyond the scope of local prohibitions on digital assets. He also points out that in China, cryptocurrencies are considered a form of personal property, which legitimizes the distribution of value.

"My family has four KYC-verified accounts with aggregate claims exceeding $15 million... We have fully complied with all procedural requirements of the Plan. The proposed motion now jeopardizes our right to distribution in an arbitrary and unfair manner," Ji stated in the filing.

The proposal filed by FTX Estate was filed on July 2 and highlights legal risks associated with making payments in jurisdictions with restrictive cryptocurrency laws. The company cited 49 countries, including China, Russia, Ukraine, Egypt, Tunisia, Zimbabwe, Afghanistan, and Moldova, where local regulations could expose executives and legal representatives to civil and even criminal penalties.

As an example, the FTX estate mentioned Moldova, where it is a crime to provide services involving virtual assets, even if in an auxiliary manner to another activity.

Since February 18, FTX Estate has begun refunding creditors classified as "convenience class," based on the price of digital assets in November 2022, the time of the exchange's collapse. This policy has sparked discontent among several creditors, especially those affected by the proposed new restrictions.