The FTX Liquidation Turmoil: Controversies and Reflections on Creditor Rights

Recently, a screenshot of a document regarding the bankruptcy liquidation of FTX has sparked heated discussions on social media. According to the document, if users are from restricted foreign jurisdictions, their claim funds may be confiscated. Even more shocking is that among the claim funds from "restricted countries," as much as 82% comes from users in China.

Due to China's strict regulations on cryptocurrency trading, these users may face the risk of being classified as "illegal," thereby losing their eligibility for claims. This situation means that these users not only cannot recover losses, but their assets may also be "legally confiscated."

This message sparked a strong reaction in the community as soon as it was announced. Many questioned the actions of the liquidation team, viewing it as an excuse to shirk responsibility. Some comments described this decision as "American-style robbery," expressing dissatisfaction with the treatment of the Chinese people. Although China has strict restrictions on cryptocurrency trading, many believe that directly confiscating user funds lacks a clear legal basis.

This incident not only raised questions about whether FTX acted "legally", but also sparked deep reflections on who is making decisions, what standards are being used, and who the ultimate beneficiaries are.

Composition and Controversies of the Liquidation Team

The team taking over the FTX liquidation work is a bankruptcy restructuring team from Wall Street. The team is led by restructuring expert John J. Ray III, who serves as CEO, and is formed by a well-known law firm. John J. Ray played a significant role in the Enron bankruptcy case, bringing nearly $700 million in revenue to the law firm.

However, the high compensation of this team has sparked controversy. According to reports, the hourly rate for law firm partners can reach up to $2,000, and John Ray himself charges $1,300 per hour. As of early 2025, the legal service fees claimed by the firm in the FTX bankruptcy proceedings have reached $249 million. These assets, which should belong to all creditors, are being gradually eroded by the "professional team."

Dispute over Disposal of FTX Investment Portfolio

The liquidation team's handling of the disposal of FTX's historical investment portfolio has also sparked widespread controversy. Multiple investment projects that were once considered important assets of FTX were sold at prices far below market value, causing dissatisfaction among creditors.

Here are a few controversial cases:

1. Cursor: Shares of this AI company were sold at an initial investment price of $200,000, while its valuation has reached $9 billion. Conservative estimates suggest that FTX has lost at least $500 million in potential profits.

2. Mysten Labs/SUI: The equity and token subscription rights acquired by FTX for approximately $100 million were sold for $96 million. However, these assets once surpassed a value of $4.6 billion at their peak.

3. Anthropic: FTX sold about 8% of its shares for $1.3 billion, but less than a year later, the company's valuation soared to $61.5 billion, causing FTX to miss out on at least $3.7 billion in additional returns.

These cases have raised questions about the decisions made by the clearing team, with many believing that these operations led to a significant loss of potential profits.

Controversies and Reflections on the Liquidation Process

A series of operations during the FTX liquidation process has sparked widespread discussion. Some observers have pointed out that the large-scale discounted sales seem to be primarily aimed at specific institutions, and many assets have experienced significant appreciation in a short period. This practice has raised questions about the motives of the liquidation team.

The liquidation team explained that these operations aim to "timely lock in funds and avoid volatility risks." However, industry analysts pointed out that this reasoning struggles to explain why discounted sales are mainly targeted at specific institutions and why most assets have significantly appreciated in the short term.

Currently, FTX's bankrupt assets are expected to be globally liquidated and distributed with a total amount ranging from $14.5 billion to $16.3 billion. However, if users in regions such as China are ultimately unable to claim smoothly, it will mean that a portion of investors may be excluded from legal protection.

This event not only involves the allocation of large sums of money but also raises people's thoughts on the fairness of the legal system. For tens of thousands of ordinary investors, this is not only a loss of funds but may also shake their confidence in fairness and justice.

In this clearing storm, we have witnessed the complexity of legal procedures and the potential gray areas. This event reminds us that in the globalized financial market, how to balance the interests of different jurisdictions and protect the rights of all investors remains an important issue that needs to be explored in depth.