On July 4, 2025, FTX creditor representative Sunil posted a screenshot of an FTX bankruptcy liquidation document on social platforms, showing that FTX will seek legal advice and may confiscate claim funds if users are from restricted foreign jurisdictions.
Sunil also disclosed a piece of data: 82% of claim funds from "restricted countries" come from Chinese users.
However, because cryptocurrency trading is not allowed domestically, these users may be classified as "illegal" and have their claim qualifications confiscated. This means that not only will these users not be able to recover their losses, but their assets will also be "legally confiscated".
The community was outraged, questioning whether the liquidation team's compliance reasons were merely an excuse to shirk responsibility. Some called FTX's decision "American-style robbery" and lamented "Chinese people are treated worse than dogs", revealing deep disappointment and helplessness. Some believe that although China has strict restrictions on cryptocurrency trading, user funds should not be directly confiscated, and FTX's decision lacks clear legal basis.
After such a statement that could rewrite global creditor rights perception, the outside world is most concerned not only with whether FTX is "acting legally", but also who is making the decision, based on what standards, and who ultimately benefits.
Who is taking over?
Taking over this ruins is a Wall Street bankruptcy restructuring team: with restructuring veteran John J. Ray III as CEO, led by the veteran law firm Sullivan & Cromwell (hereinafter referred to as S&C), forming the liquidation team.
John J. Ray, an old hand at handling corporate "corpses". He previously handled the Enron bankruptcy case, where he brought nearly $700 million in revenue to S&C in that "trial of the century".
This time, he brought the same law firm team to take over FTX.
High fees are not the problem; the problem is how high they are. According to public documents, S&C partners charge up to $2,000 per hour, and John Ray himself charges $1,300 per hour. According to Bloomberg's disclosed data, by early 2025, S&C had cumulatively claimed legal service fees of $249 million in the FTX Chapter 11 bankruptcy proceedings.
Assets that should belong to all creditors are being "professionally" cut away piece by piece. This is why FTX creditors have been criticizing: "They are repeating the Enron script."
Another ironic thing is the speed at which FTX announced its bankruptcy. It wasn't until SBF's complete testimony draft to Congress was exposed that we learned how he was "hunted" in the two days before the bankruptcy filing.
A draft testimony prepared by SBF (Sam Bankman-Fried) showed that FTX.US's chief legal counsel, also from S&C, Ryne Miller, had closely cooperated with the liquidation team to force SBF and his management team to quickly enter Chapter 11 bankruptcy proceedings.
SBF wrote in his testimony: "People from Sullivan & Cromwell and Ryne Miller sent me many threats, they even harassed my friends and family... Some people came to me crying."
But he no longer had a chance to turn back. The five emails he sent were never replied to by John Ray.
He was just the previous protagonist in this sophisticated plunder.
That bankruptcy filing was pressed in an overnight bombing, panic, and isolation. He wanted to continue fundraising and try to save the situation, but was kicked off the stage by the legal counsel he had invited.
The real game - about who takes over this company and who divides its legacy - was just beginning.
Who is dividing FTX's legacy?
The bankruptcy liquidation team's handling of FTX's historical investment portfolio is infuriating and puzzling.
These portfolios were once important chess pieces in SBF's "effective altruism" dream and were once considered valuable reserves for FTX's potential comeback, but were almost "cut and sold" by John Ray's team, mostly at prices far below their real value.
These three most eye-catching transactions are enough to glimpse the absurdity of the entire liquidation:
1) Cursor: $200,000 exchanged for a $500 million sigh
Cursor, praised by the AI circle as a "Vibe coding magic tool", was seed-round invested by FTX for $200,000 and sold at the original price during liquidation. On the surface, it seems not to be a loss, but considering that Cursor has been reported by authoritative media like TechCrunch and Bloomberg to be valued at up to $9 billion, this selling price is outrageous.
According to conservative calculations, FTX could have recovered at least $500 million in stock returns, but was handed over under the lawyer team's operation. The industry even joked that it was "faster to make money than BitTrump", directly pointing out that this asset was sold "especially black".
2) Mysten Labs / SUI: Selling a $4.6 billion public chain dream for $96 million
Mysten Labs and its developed SUI chain are considered the next Solana, with extremely high public chain expansion capabilities.
FTX obtained Mysten's equity and subscription rights for 890 million SUI tokens for about $100 million in 2022, but the liquidation team disposed of this asset for $96 million in 2023, with the reason of "quickly recovering funds".
At its peak, this batch of SUI was valued at over $4.6 billion, meaning the $96 million at the time was only about 2% of its future value.
The community once joked that if SBF saw SUI's market conditions in prison, he might cough up blood in anger.
3) Anthropic: Selling away a $61.5 billion giant for $1.3 billion
Anthropic, founded by former OpenAI executives, focusing on AI safety, was personally invested $500 million by SBF, holding about 8% of the shares.
The liquidation team sold all shares in two installments in 2024, totaling $1.3 billion. The outside world initially thought this was not a bad cash-out performance, but less than a year later, Anthropic's valuation soared to $61.5 billion. Calculated accordingly, FTX's 8% stake would be worth nearly $5 billion.
This means the bankruptcy liquidation team missed out on at least $3.7 billion in additional returns.
No one would deny that FTX's investment vision was correct. They precisely shot bullets before the wind came, bet on these companies at their most overlooked moments, and obtained core shares.
But after FTX's collapse, these bets were treated like scrap iron.
In addition to these three typical cases, the FTX liquidation team used consistent operations to "sell away" assets like LedgerX, Blockfolio, and SOL token bulk auctions, causing huge controversy.
For example, during the 2024 SOL token liquidation auction, institutions like Galaxy Trading and Pantera Capital bought at low prices, and then SOL's price soared, with extremely impressive profit-taking, while the original creditors could only watch the opportunity slip away. According to reports from the Financial Times and Cointelegraph, FTX is considered to have missed potential value-added of at least tens of billions of dollars in the disposal of high-quality assets.
Why did this concentrated and short-term "liquidation dumping" occur? John Ray's explanation was "timely locking of funds and avoiding volatility risk", but industry analysts point out that this reason cannot explain why large-scale discounts were only targeted at familiar institutional friends, and many assets doubled within less than 6 months.
Thus, conspiracy theories emerged that the liquidation team quickly sold good things to their familiar funds in an extremely short time, collecting sky-high lawyer fees and quickly closing the case, ultimately making a fortune. Assets originally belonging to creditors were transferred at low prices to those closer to the power center under the framework of "reasonable and compliant".
The value of shares, tokens, and options sold at a low price continues to grow; those who should have held onto this growth can only watch their future being snatched away through a published PDF.
Bankruptcy Liquidation or "Legal Plunder"?
No industry is better at forgetting than the crypto industry. Currently, the market has once again fallen into the pursuit of AI, stablecoins, and RWA, as if the 2022 crisis has passed, but this liquidation process is far from over.
Over the past three years, FTX's assets have been sliced, packaged, and auctioned, stripping away a platform's entire future, leaving only an empty shell.
The scale and complexity of FTX's bankruptcy liquidation is enough to be recorded in global crypto history, but what truly deserves to be written into textbooks is perhaps the collective disillusionment of creditors with the legal trust system.
On one hand, the liquidation legal team represented by John Ray and S&C has legally collected astronomical fees, almost impossible to be held legally accountable. On the other hand, they have added a protective shield through exemption clauses, without having to bear responsibility even if future accusations of "malicious liquidation" arise.
For tens of thousands of retail investors robbed by FTX's explosion, this is not redemption, but a second injury. You might have missed market opportunities, but being deprived of a fair chance to recover is the most cruel.
Currently, FTX's bankrupt assets are estimated to be globally distributed with a total of $14.5 billion to $16.3 billion. However, if users from regions like China cannot successfully claim compensation, it will mean another unresolved tragedy: some are completely excluded from the legal system, with funds originally belonging to them devoured by legal procedural complexities and bankruptcy lawyers' gray areas.
Moreover, in the new proposal submitted by the FTX team to the bankruptcy court, hidden clauses exempting consultants are embedded, making it almost impossible for creditors to sue or appeal.
Perhaps for the industry, FTX's collapse is just another cycle's bottom, but for those trapped within, especially tens of thousands of Chinese retail investors, this is not just a loss of funds, but the end of hope.
Those lawyers and consultants praised as a "professional liquidation team" can decide the fate of billions of dollars with just a few lines, yet no one is left to provide these ordinary investors with any chance of a comeback.
