Viewpoint: The confiscation of FTX compensation funds from Chinese users due to the encryption ban lacks legal basis, and FTX claims are denominated and settled in US dollars.

On July 6, Chinese crypto KOL @zhetengji expressed his views on the matter of “FTX creditors claiming that they may seize the compensation funds for Chinese users,” stating: “FTX’s debts are denominated in USD and settled in USD, and it has now entered the compensation distribution phase, which has nothing to do with crypto assets regulation. There are no legal risks for Chinese citizens receiving compensation in USD. The motion by the FTX Recovery Trust has lacked legitimate legal basis from the beginning. Furthermore, in the Celsius bankruptcy case, they are also an American crypto assets company, and they compensated creditors through bank wire transfers, with Chinese creditors successfully receiving compensation.” @zhetengji believes that FTX can compensate Chinese creditors in the same manner. Previously, FTX creditor representative Sunil posted on social media stating that in the claims from countries where FTX is restricted, 82% of the claim funds belong to Chinese users, but currently, crypto assets trading is not allowed in China, and there are no authorized distributors. According to documents provided by Sunil, FTX will seek legal advice and will distribute funds to potentially restricted foreign jurisdictions if possible; if it is determined that residents belong to restricted foreign jurisdictions, disputes may arise regarding claims, which could lead to the forfeiture of distributions.