FTX Restricted Jurisdictions. What Actually Happened.

What the Motion Actually Said

On July 10, 2025, the FTX Recovery Trust filed a motion asking the Delaware Bankruptcy Court for permission to establish a "Restricted Jurisdiction Procedure." The motion argued that paying creditors in certain countries was legally impossible due to sanctions, regulatory restrictions, and the inability to find compliant payment channels.

The list included ~49 countries. The biggest by claim value were Russia, China, Ukraine, and Belarus — collectively representing hundreds of millions in outstanding claims.

The proposed procedure would have allowed the Trust to declare certain claims "forfeited" if no compliant payment method could be found within a set timeframe. That word — forfeited — caused mass panic.

What "Withdrawn Without Prejudice" Actually Means

The Trust withdrew the motion "without prejudice" — legal language meaning they reserve the right to refile. This is not the same as a permanent victory for creditors.

In practice, it means the Trust will handle restricted jurisdiction cases individually rather than through a blanket procedure. If they can find a compliant way to pay you, they will. If they genuinely cannot — for example, a creditor on the OFAC SDN list — they can still freeze that specific claim.

But the mass forfeiture risk is gone. For the vast majority of Russian, Ukrainian, and Belarusian creditors who are not personally sanctioned, the withdrawal means their claims are still valid and payable.

Current Status by Country (April 2026)

The Real Problem: Infrastructure, Not Law

The motion being withdrawn doesn't mean a Russian creditor can now easily select BitGo or Kraken and receive a wire to their Sberbank account. The legal right to receive payment was restored. The practical infrastructure to deliver that payment is a separate problem.

BitGo operates under US regulations. Kraken is a US-registered exchange. Payoneer has its own compliance requirements. None of them will onboard a customer with a Russian or Belarusian bank account in 2026.

This is why the secondary market exists. The claim is legally yours and legally transferable. A Qredax company that passes its own KYC has no geographic limitations on receiving distributions.

Passport vs. Residence: The Key Distinction

One of the most important — and most misunderstood — facts about the restriction: it is based on verified residence, not passport nationality.

A Russian citizen who has moved to Georgia, UAE, Turkey, or Kazakhstan can update their jurisdiction on the Kroll portal. Once Kroll verifies the new residence, the restriction lifts and distribution provider options for that country become available.

How to update your residence:

1. Email [email protected] with subject "Jurisdiction Update Request"
2. Attach your residence permit for the new country
3. Attach a utility bill or bank statement dated within 60 days
4. Include your claim number

Processing typically takes 2–4 weeks. After that, you can select a DSP available in your new country and proceed normally.

If You Can't Update Your Residence

For creditors who are physically in Russia or Belarus and don't have foreign residency documents, selling the claim is the most practical path.

The mechanics: the claim is transferred to a Qredax (Mudrevskiy Corporation) via a Sale and Assignment of Claim agreement. The Qredax company becomes the new holder of record. It has no connection to Russia or Belarus. It selects BitGo or Kraken as its DSP. It receives the distribution. You receive payment in USDT within the agreed timeframe.

The restriction disappears at the moment the transfer is recorded on the Kroll register — because the restriction was attached to you as the holder, not to the claim itself.

Belarus: The Hardest Case

Belarus deserves special attention because it faces a double restriction: the FTX jurisdiction issue plus the EU's 18th sanctions package adopted in July 2025.

The EU package includes a broad transaction ban affecting certain Belarusian entities and individuals, and prohibits crypto-asset service providers from servicing Belarusian nationals unless they have EU/EEA/Swiss residency. This means even after the FTX motion withdrawal, EU-based payment processors won't touch a Belarus-resident payout.

For Belarus creditors, the options are:

• Foreign residency proof (Poland, Lithuania, Czech Republic, Georgia) — update Kroll, proceed normally
• Sell to Qredax — fastest and cleanest, payment in USDT with no sanctions exposure
• Manual wire via BitGo to a bank in Kazakhstan or UAE — possible in theory, rarely approved in practice

What Happens If You Do Nothing

If you're in a restricted country and take no action, your claim sits in limbo. It won't be automatically forfeited — the motion for that was withdrawn. But you also won't receive any distributions until you either update your residence or sell.

The FTX distribution schedule is projected to continue into 2027. Waiting is an option, but it carries two risks: the Trust could refile a restricted jurisdiction procedure (they withdrew "without prejudice"), and your claim continues to not generate any cash.

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