Billions on the Line: A Top Chinese FTX Creditor's Battle for Recovery

In this episode, Will, a major Chinese creditor of FTX, shares his personal story of loss during the FTX collapse and explains the potentially devastating impact of FTX’s proposed ‘Restricted Jurisdiction’ motion. According to Will, the motion could strip creditors in 49 countries — including China — of their right to repayment. The core issue, he argues, lies in FTX appointing its own legal advisors to issue legal opinions, which risks being biased and could unfairly exclude Chinese creditors from compensation.

Will has taken legal action, hiring attorneys and urging other creditors to write to the judge before the July 15 deadline to oppose the motion. The conversation also covers Will’s investment decisions before and after FTX’s collapse, his legal strategy for reclaiming assets, and broader concerns about systemic injustice in the bankruptcy process.

FTX Motion Sparks Alarm Among Chinese Creditors: Will Shares His Story and Motivation to Take Action

Colin: Hi everyone, welcome to this episode of the WuBlockchain Podcast. Today we’re talking with Will, who’s been at the center of a major issue — FTX recently announced that Chinese creditors may not be eligible for compensation, or at least face complications. This has sparked widespread discussion in the Chinese crypto community. Will is one of the largest Chinese creditors of FTX and has emerged as a representative figure for other claimants. We invited him to share his personal story. Will, can you start by introducing yourself?

Will: Hi everyone, I’m Will. I have a background in science and engineering — my PhD is in geophysics. I entered the crypto space in 2017.

I’ve done a lot in crypto. I’ve run a fund, worked at an exchange, mined Bitcoin and Ethereum, and even managed a quant trading team. I’ve basically experienced every corner of the industry. But looking back, my biggest gains came from holding Bitcoin through major market cycles. That’s why I identify most as a Bitcoin maximalist, and I’ve always followed a BTC-denominated investment approach.

I’m one of the larger creditors involved in the FTX case. Early on, I even ran for a seat on the Unsecured Creditors Committee. I hired a lawyer because I was deeply frustrated by what had happened, and my lawyer suggested I run. I had a fairly large claim and some industry experience, and we felt it was important to have Chinese representation on the committee.

I made it to the second round of the selection process and even had a phone interview with the committee or possibly with someone from the FTX Trust. But ultimately, I wasn’t selected. Later, after some progress in the case, one member dropped out and I was asked if I’d like to be considered as an alternate. I said yes, but never heard back after that. So that’s the background on how I got involved.

The reason I’ve stepped forward again is because the FTX Recovery Trust recently filed a new motion with the court. I read through the entire document word for word and realized this motion could seriously jeopardize our ability to recover compensation. So I started speaking out on Twitter and created a Telegram group to bring together other FTX creditors. We’re now trying to organize, share information, and fight to protect our rights.

Colin: So most of the assets you held on FTX were in Bitcoin?

Will: That’s right. The reason I had such a large position on FTX was because — you might remember this — there was a period when rumors were swirling that Chinese exchanges like Binance and OKX were sharing large traders’ information with local authorities. As someone still living in China at the time, I was really worried about my assets. So I moved a substantial amount to FTX. After the March 2020 crash, I basically put my entire net worth there.

I had bought the dip in BTC and sold everything in the $40K to $47K range. Then I moved all my USDT to FTX, planning to gradually re-enter the market. All my big wins previously had come from swing trading BTC across big cycles.

So under that context, I held mostly BTC and USDT on FTX. Those were my only two positions. I can’t disclose the exact amount, but based on early data, I was among the top 100 creditors.

Colin: Were your assets previously held on OKX or Binance?

Will: Binance.

Colin: So you weren’t really a regular FTX trader. You moved your assets there mainly because of that specific risk.

Will: Yes, but I did have some holdings on FTX even before the collapse. My asset allocation at the time was roughly two-thirds on Binance and one-third on FTX. FTX was attractive because of its strong spot margin lending feature, which was especially useful during the peak of DeFi activity. I was actively doing on-chain arbitrage, so I needed access to certain tokens through lending. After the crisis began, I moved nearly all my core holdings to FTX — over 90% of my total crypto portfolio.

Colin: Do you remember when you started making the transfer?

Will: FTX declared bankruptcy in November, so I believe I started moving funds around July or August. My memory’s a bit hazy on the exact dates.

The Cost of Trusting FTX and a Missed Opportunity to Sell Claims

Colin: Why did you trust FTX enough to move 90% of your assets there?

Will: Looking back, I made a serious mistake. I used to work at a crypto exchange, and to be honest, I’ve never truly trusted centralized platforms. But at the time, the market sentiment and media narrative really made FTX look like a rising star.

I was already planning to relocate overseas, and FTX had the most efficient USD conversion among all exchanges — no one else came close. Their fiat on-ramp and off-ramp worked so smoothly that I believed it was a well-regulated and compliant platform.

Plus, FTX’s spot margin lending was extremely useful for my on-chain arbitrage strategies. All of these factors led me to move a significant amount of my assets there.

Colin: So at that point, you had already sold most of your BTC, and what you had on FTX was mostly USDT — were you planning to buy the dip?

Will: Yes, I was preparing to re-enter the market. I still held some BTC, and my portfolio was split into two parts: a base position I never touched, and a more flexible trading portion. I even moved my base BTC into FTX because I was concerned about on-chain data leaks. I used the exchange as a kind of buffer to obscure some of my wallet activity.

So I moved over my base holdings, my USDT, and some assets from Binance. My plan was to buy the dip, then withdraw the funds back into my wallet. But FTX collapsed so quickly that I never got the chance. Honestly, it was just bad luck.

Colin: When FTX froze withdrawals and filed for bankruptcy, did you feel hopeless?

Will: I did. But overall, I managed to stay relatively calm — although there were definitely some dark moments. I was planning to reallocate those assets to secure my family’s financial future. I had already chosen the investments. So when it all collapsed, I did feel a sense of guilt — especially toward my wife and kids.

That said, I held it together pretty well. A lot of people around me were genuinely worried. Some even contacted my family, fearing I might do something irrational because of the financial shock.

Colin: That’s understandable. Many FTX creditors struggled to cope mentally after the collapse.

Will: Absolutely. But I’m not someone with strong material desires. To me, losses are just fluctuations on a screen. Within a couple of days, I pulled myself together and began contacting lawyers to see what legal options I had.

Colin: Got it. As the price of FTX claims started rising, did that boost your optimism?

Will: It went through phases. When claim prices reached around 50 cents on the dollar, I seriously considered selling. But due to some off-market factors, the deal didn’t go through. Around that time, BTC was also surging.

Colin: Right, a lot of people were selling claims to buy back into BTC.

Will: Exactly. I’ve always thought in BTC terms — I get uncomfortable when I don’t hold enough Bitcoin. So I hesitated, thinking maybe BTC would dip again, and I could sell the claim later and buy more BTC. Typical retail investor behavior. That hesitation cost me.

When claim prices hit 82 cents, I reached out to a UK-based firm called Attestor, one of the biggest claim buyers in the FTX case. A lot of people knew about me because of my large claim and my active role in the creditor community.

I had four accounts, not just one. One of them hadn’t passed KYC, which created about a 5% price spread. Some buyers wouldn’t even consider non-KYC accounts. I negotiated through a broker, and Attestor said they didn’t mind and could handle the KYC issue themselves.

I requested a three-week turnaround in the initial contract, because I wanted to quickly re-enter the BTC market with the funds. Speed was crucial — if it took too long, I’d rather not sell.

But something happened. I was very cautious and even emailed them directly to confirm in writing that the KYC issue wouldn’t affect pricing. Although the broker kept saying ‘OK’ in the Telegram group, I never received an official reply. Three weeks passed with no confirmation, so I backed out of the deal.

That experience made me extremely cautious about selling claims. The trust cost was just too high — too many potential traps. So I decided to hold onto my claim, and I still haven’t sold it to this day.

FTX Repayment Progress: Chinese Creditors Still Left Out

Colin: So FTX started issuing repayments in the past six months or so, right? But initially, it seems they only repaid small claims, so larger creditors like you weren’t included. Can you walk us through the overall repayment timeline? I only know the rough outline.

Will: I can’t recall exact dates, but I can summarize the general process. First, they dealt with claims under $50,000. When submitting claims, there was an option called ‘expedited payout’ — even if your claim was over $50,000, you could opt to receive just $50,000 quickly. For those whose claims were already below that threshold, they received their full repayment in the first round. That was Phase One.

The second round happened last month. This time, creditors received around 70–78% of their total claim value.

But here’s the issue: Chinese creditors didn’t receive anything during this second round. FTX claimed they couldn’t find a suitable service provider to process payments for Chinese users and asked us to wait until they did.

This explanation didn’t sit well with us. The original service providers were BitGo and Kraken. But many Chinese creditors — myself included — regularly use Kraken to move USD in and out, so we couldn’t understand the excuse.

I told myself maybe Kraken didn’t want to officially acknowledge serving Chinese customers, and maybe FTX would find a more ‘suitable’ provider. So we waited — we’ve been waiting for years already.

That’s where things stand now. Two rounds of distribution have passed, and we’re still waiting. I don’t think the process should go too far off track, so my mindset has been: just keep waiting.

Colin: So in the first round for claims under $50,000, Chinese creditors weren’t excluded?

Will: I’m not entirely sure — I wasn’t in that category and didn’t pay close attention at the time.

‘Restricted Jurisdiction’ Motion Highlights Structural Injustice and Risks

Colin: So the latest development is that FTX filed a motion. What exactly is this motion, and what impact might it have?

Will: The motion is called the ‘Restricted Jurisdiction Procedure.’ Here’s how it works.

Step one: FTX identified 49 countries — China included — that they consider ‘unfriendly’ toward crypto. The FTX Recovery Trust claims that if they were to distribute crypto assets directly to creditors in these jurisdictions, their executives and legal counsel could face legal risks. So they want to avoid that.

Their solution is to hire local lawyers in each of those 49 countries. These lawyers would issue legal opinions stating whether crypto repayments are permissible under local laws. If the opinion says yes, FTX proceeds with the payment. If the opinion says no, those funds would not be distributed to the affected creditors — instead, they’d be returned to the FTX trust and redistributed among the remaining 95% of creditors.

Colin: So basically, they’re hiring lawyers familiar with, say, Chinese law to decide if repayments are legal. If not, they just redistribute the funds to others?

Will: Exactly. And that’s why I’m speaking out against this motion.

The issue is: they’re hiring the lawyers — not us. If their lawyer issues an opinion that says repayment is illegal, we lose all control over the outcome. Once the court approves the motion, our fate is no longer in our hands.

Even worse, how can we be sure the lawyers they hire are impartial? They’re being paid by FTX and are working to protect the interests of the majority — and now, Chinese creditors like us are the minority, just 5%.

I shared a video on Twitter yesterday of someone from a claims-buying firm saying outright that this motion would definitely pass — because 95% of creditors benefit, and no one cares about the other 5%. That’s a chilling thought.

Colin: Yeah, unless it’s an extremely small group, that seems unfair.

Will: Exactly. But we are a small group now. And FTX clearly wants this motion passed because it accelerates the bankruptcy process. Plus, it benefits the majority of creditors — the other 95%.

Legal Pathways and Action Plan to Oppose the Motion

Colin: So what’s your next move to respond to this motion?

Will: That’s exactly why I decided to speak out and set up a Telegram group — because there’s still time to act. We have until July 15 to submit letters to the judge opposing the motion.

There are two main ways to oppose it. First, as an individual creditor, I can write a personal letter to the judge expressing my objection. Second, I can have my U.S.-based lawyer file a formal objection through the legal system. I’m pursuing both routes in parallel.

Based on my understanding of U.S. bankruptcy law, there are a few critical steps. First, the letter must clearly explain our reasoning and be sent directly to the judge overseeing the case. Then, we must copy the letter to the FTX Recovery Trust and their legal team.

FTX has two sets of lawyers — one in their main New York firm, and another team handling the bankruptcy court locally. In addition, because we believe this motion has strayed far from standard legal reasoning, we’re also sending the letter to the regulators.

So we’re copying the letter to the United States Trustee (UST), the official federal watchdog in U.S. bankruptcy cases, which oversees the entire FTX bankruptcy process.

My Telegram group members and several other creditors I’ve been in contact with on Twitter are now sending letters individually. And since it’s currently a holiday in the U.S., I’ve scheduled a meeting on Monday with my long-term legal counsel in New York. I’m hoping he can file a formal legal objection on my behalf through the attorney system.

Colin: We talked earlier about something pretty controversial — that those who sold their claims might actually escape the impact of this motion because their claim location can be reassigned. Is that right?

Will: Exactly. The motion explicitly states that institutions that purchased claims will not be affected. That’s clearly written in the motion.

Colin: So, hypothetically, if a UK or Singapore-based firm — or even a Hong Kong entity — holds the claim, they wouldn’t be impacted?

Will: That’s correct. For instance, I have an account under a Hong Kong company where I’m the sole shareholder and legal representative, and I hold a Chinese passport. Yet I still haven’t received any distribution for that account.

Colin: The motion officially only targets China mainland and Macau, right?

Will: That’s how it reads. But I’ve looked closely at the legal wording, and it actually bases its determination on ‘tax residency,’ not passport nationality. If tax residency is the standard, then I should qualify — I’m a tax resident of Singapore.

This has been dragging on for a long time. In my Telegram group, many are in the same boat. At the time of filing, most of us were tax residents in mainland China, but since then, many have moved abroad — to Canada, the U.S., Singapore, or Hong Kong — and have become local tax residents. Some have even changed their citizenship.

These details, including KYC data and tax forms, can be updated. I’ve updated mine. But despite that, they still say I’m ineligible for repayment. This highlights serious flaws in the system.

The Tug-of-War Between Tax Status Disputes and Selling Claims as a Backup Option

Colin: So let’s say, hypothetically, a tax consultancy or debt acquisition firm buys your claim — would they be able to get repaid without issues?

Will: Yes, they would. In fact, right after this motion came out, three such firms reached out to me directly. That’s what makes the whole thing feel incredibly unfair and unjust.

Colin: What kind of prices were they offering? Any idea what the going rate is?

Will: Honestly, I didn’t even get that far. I didn’t talk to them about pricing.

Colin: But have you heard what the market rate is right now?

Will: Given the size of my claim, I’ve received offers in the range of 120% to 130% before.

Colin: That’s actually quite a solid offer.

Will: It is. Theoretically, it could serve as a last-resort exit strategy.

Colin: But aren’t you worried that even this route might eventually be blocked — like they might be restricted too?

Will: Of course I’m worried. It’s not a small amount. I’m a normal person. But I guess I’m also a bit stubborn. I don’t want to give in unless it’s the very last option. That’s not to say I’ll never sell — I just think, from an engineer’s perspective, this situation is completely irrational. And my wife’s a lawyer, and many people around me are lawyers — they all agree this is wrong.

Colin: So you still think there’s room to fight — that it’s not completely hopeless.

Will: I’m not 100% confident, but I do think that if there’s any respect for legal reasoning left, this motion shouldn’t go through so easily.

Colin: If the normal repayment goes through, would you be entitled to something like 150%?

Will: It’s fairly straightforward. Your original claim amount — if calculated in USDT — would get you back 100%. Of course, if you held BTC, you’d take a hit because they’re valuing it at $16,500 per coin, which is well below today’s price.

I had a lot of USDT in my claim, so that portion would be reimbursed in full — that’s the base 100%. On top of that, they’re adding annual interest of 9% from the time of bankruptcy to the final resolution.

So the general consensus is that a final payout of around 140% to 130% is realistic.

Colin: So the gap isn’t that big after all — maybe a 10% difference?

Will: Yes, but there’s a critical issue here: information asymmetry. A lot of FTX assets still haven’t been recovered, and many lawsuits are ongoing. These could bring in significant additional value. That’s why many firms are actively acquiring FTX claims right now.

In the current global financial environment, a 9% annual return is already very attractive. But this claim also has upside potential. As a financial asset, it’s high-quality.

Colin: So does that mean holding the claim doesn’t mean you’ll get all the funds immediately — you can choose to wait?

Will: Not exactly. The repayments are being made in phases. What’s happening now is just the first distribution. The rest may take a while, but they’ve committed to paying 9% annual interest for the duration of the wait.

That’s why traditional financial firms and debt buyers see this as such a juicy asset. It offers both stable yield and time-value appreciation.

Colin: You mentioned the latest round was a 70% payout, right?

Will: Yes, either 70% or 78%, depending. When they talk about 90%, that’s an estimate based on total expected recovery.

Diverging Paths Among Creditors and the Mounting Legal Debate Over Stablecoin Compensation

Colin: What about the other creditors you know? You mentioned there’s a Telegram group with hundreds of people. Are most of them holding or have some already sold their claims?

Will: It’s pretty split. Most of the active members in my group are still holding. They’re the ones writing letters, speaking out, actively resisting — all committed to keeping their claims. But after this motion was announced, I did see a noticeable number of people who had been holding start selling. The pressure from the motion clearly pushed some into liquidating.

Colin: Do you suspect that some of these debt-buying firms might have inside connections with FTX?

Will: I absolutely do. And I’ve made that point explicitly in my letter to the judge. I find the situation completely unreasonable. My claim is rated 5A — under U.S. bankruptcy law, creditors of the same class should be treated equally regardless of nationality or jurisdiction.

But what’s happening now is that if I sell my claim to a debt-buying firm, they can get reimbursed. Yet if I hold onto it myself, I can’t. How is that fair? That’s why I’m taking a strong stance against this motion.

I’ve read the full text of the motion — and the arguments are completely flawed. First, we need to be clear that these are now USD-denominated claims. They’re not based on crypto prices anymore.

Colin: And you’re being repaid in dollars too, right?

Will: Yes, in dollars. FTX claimed that because of the global reach of its business, it would be more ‘convenient’ to settle claims using stablecoins. The court approved that approach. In fact, even the SEC had raised questions about paying in stablecoins, but in the end, most of us — including Chinese creditors — were fine with it. After all, stablecoins are very convenient in the crypto space.

But now, FTX suddenly flips and says it can’t repay Chinese users due to crypto regulatory issues. That logic doesn’t hold up. First, this is a USD-based claim. Second, there’s massive trade and financial interaction between China and the U.S., and cross-border bankruptcy settlements aren’t new. No other case has used ‘foreign exchange controls’ as an excuse to exclude Chinese creditors — only FTX has made that argument.

Colin: To be fair, China’s legal stance on stablecoins and crypto is kind of murky. That could be a legitimate hurdle.

Will: I agree it’s not black and white. But the legal justification FTX used in its motion is incredibly flimsy. They cited a 2017 notice issued during the ICO craze by multiple Chinese regulators. That document simply stated that financial institutions and payment providers were prohibited from engaging in token issuance and related services.

But FTX twisted that, using a version relayed through Macau, to claim that ‘China doesn’t support virtual currency’ — and used that as legal grounds to deny repayment. That kind of citation is deeply problematic.

FX Restrictions, Offshore Alternatives, and a Looming Court Deadline

Colin: To be fair, China has issued several new rules in recent years that restrict institutions from participating in crypto-related activities. If someone wanted to take a strict interpretation, they might be able to find legal grounds to support FTX’s motion — even if their citations are shaky.

Will: That’s true, and I acknowledge that. But from what I’ve read, most of those rules focus on banning specific activities — like private fundraising or crypto trading — not on individuals holding digital assets. I’ve reviewed all those regulations carefully, and there’s no explicit law that says it’s illegal for Chinese citizens to own crypto.

Colin: But what about the payment aspect? Couldn’t they argue that the payment path is blocked, making compensation impossible?

Will: If the issue is with the payment path, why not just wire USD directly? You can’t deny me my property simply because it’s inconvenient to pay me.

Colin: But isn’t there still foreign exchange control in China? Could that be the underlying problem?

Will: I don’t think that holds up. Other countries — like South Korea — also have FX controls, but their creditors still got paid. FX restrictions only apply when funds are converted into RMB and enter mainland China. If I have a bank account in Hong Kong or Singapore and get a USD wire there, no FX issues are involved.

Colin: Right. Using a licensed platform like HashKey or OSL might also be a viable workaround.

Will: Exactly. But we don’t even need an exchange. A simple wire transfer to an offshore account would suffice. If I give you a non-mainland bank account, FX restrictions aren’t triggered. And even if it were considered offshore income in China, I could just pay the appropriate taxes. That’s not the same as being banned from receiving compensation.

Colin: The problem is, the process in China is complicated — like filing taxes. Who do you even talk to for that?

Will: True, it’s messy. But in a related case, part of the same FTX litigation cluster — Chinese creditors were compensated via USD wire transfers. It was handled in a U.S. court, specifically the Southern District of New York. That precedent should count.

Colin: That seems like solid ground to counter their argument, or at least offer an alternative view.

Will: There’s also Mt. Gox — that case involved Chinese users too, and it’s being settled in BTC. That was under Japanese jurisdiction, of course.

Colin: Legal interpretations do vary by jurisdiction. Things are still pretty ambiguous in China.

Will: Exactly. And that’s why this FTX motion is so flawed. Even if the logistics are slightly more complex, that doesn’t justify stripping us of our legal assets.

Colin: So using Hong Kong — through platforms like HashKey or OSL — might be a valid channel? Even if someone doesn’t have a Hong Kong ID, setting up an account is usually just a matter of providing a local address.

Will: Honestly, it doesn’t need to be that complicated. Remember, this is a USD claim. Stablecoins are just one way to distribute. They can easily wire money via traditional banks. If I have a Hong Kong bank account, I don’t need an exchange at all to receive funds. The motion’s logic is flawed from the ground up — both in its intent and in its potential consequences.

Court Date Approaches as Creditors Race to Push Back

Colin: I think we’ve now covered the whole process pretty thoroughly. So now that the motion has been filed, it’s up to the judge, right? When’s that hearing scheduled?

Will: July 22nd.

Colin: So that’s when the judge will decide whether to approve the motion. If it passes, FTX will then consult local legal experts — like Chinese lawyers — to determine if repayments are legally viable.

Will: Exactly. Once the judge approves it, we have 45 days to prepare. That’s our window to find legal counsel and submit formal objections. If I want to challenge this motion, that’s the period to gather evidence and submit a legal response.

Colin: Sounds like this could drag on for quite some time.

Will: I don’t mind the long game. What worries me is the short-term deadline — July 15th. That’s the last day to submit objections. If you miss that, you lose your right to protest.

The problem is that most Chinese creditors don’t have lawyers. I do, but most people in our group don’t. And it’s tough to find legal help, draft a filing, and use the U.S. court’s electronic system — all within a few days.

So right now, our main strategy is to mail physical letters. But even that’s tight — it takes 3 to 5 days for a letter from mainland China to reach the U.S., and we have to send it to four different parties. Time is extremely short. That’s why I’ve been publishing information, templates, and guidance to help others act quickly.

Colin: Got it. Well, this has been a really informative discussion. Thanks for sharing everything. If people want to follow up, they can find you on Twitter or join your Telegram group.

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