FTX Bankruptcy Liquidation Sparks Controversy: Concerns Arise Over Creditors' Rights Being Compromised

Recently, representatives of FTX creditors released a bankruptcy liquidation document, which has attracted widespread attention. The document indicates that if users are from restricted foreign jurisdictions, FTX may confiscate their claim funds. More notably, among the claims from "restricted countries," 82% comes from Chinese users.

Due to China's strict restrictions on cryptocurrency trading, these users may be classified as "illegal," thus losing their right to claim compensation. This means that they not only cannot recover their losses, but their assets may also be "legally confiscated." As soon as this news broke, it sparked a strong reaction in the community. Many questioned the actions of the liquidation team, seeing it as an excuse to shirk responsibility. Some commentators referred to FTX's decision as "American-style robbery," expressing deep disappointment and helplessness.

This event not only involves whether FTX "acted legally", but also raises concerns about the identity of decision-makers, standards of conduct, and the ultimate beneficiaries.

The team taking over FTX is a bankruptcy restructuring team from Wall Street, led by restructuring expert John J. Ray III as CEO, with the prestigious law firm Sullivan & Cromwell (S&C) at the forefront. John J. Ray has handled the Enron bankruptcy case, bringing nearly $700 million in revenue to S&C.

However, the high fees of this team have sparked controversy. S&C partners charge up to $2,000 per hour, while John Ray himself charges $1,300 per hour. As reported, by the beginning of 2025, the legal service fees claimed by S&C in the FTX bankruptcy proceedings have reached $249 million. These assets, which should belong to the creditors, are being gradually consumed by the "professional team".

The process of FTX's bankruptcy filing has also sparked questions. A draft of the testimony that SBF is preparing to submit to Congress shows that FTX.US's general counsel Ryne Miller worked closely with the liquidation team, forcing SBF and his management team to quickly move toward Chapter 11 bankruptcy proceedings. SBF claims to have been threatened and harassed by Sullivan & Cromwell and Ryne Miller.

The liquidation team's handling of FTX's historical investment portfolio has also been highly controversial. Several high-potential projects were sold at prices far below their actual value, raising questions about the fairness of the liquidation process.

For example, the AI company Cursor was sold for the original price of $200,000, while its actual valuation reached as high as $9 billion. Mysten Labs and its SUI chain were sold for $96 million, but its token value once exceeded $4.6 billion. An 8% stake in the AI company Anthropic was sold for $1.3 billion, but less than a year later, the company's valuation reached $61.5 billion, and the shares originally held by FTX were worth nearly $5 billion.

This concentrated and short-term "liquidation sell-off" has sparked a lot of speculation. Some believe that the liquidation team may sell high-quality assets at a low price to familiar institutions in a very short time, while charging high legal fees, quickly closing cases for profit.

Currently, the bankruptcy assets of FTX are expected to be globally liquidated and distributed for a total of between 14.5 billion and 16.3 billion USD. However, if users in regions like China ultimately cannot successfully claim their compensation, it would mean another tragedy: some investors may be excluded from the legal system, and the funds that originally belonged to them could be consumed by complex legal procedures and the gray operations of bankruptcy lawyers.

The collapse of FTX is not just another low point in the market cycle; for tens of thousands of ordinary investors, it represents a dual loss of funds and hope. Those lawyers and consultants hailed as the "professional liquidation team" can determine the fate of billions of dollars in assets with just a few lines of text, yet it seems they have left no chance for these ordinary investors to turn things around.