The FTX recovery trust does not have the legal authority or practical ability to delineate "restricted jurisdictions." As stated in the motion for the FTX recovery trust, FTX's business before bankruptcy spanned hundreds of countries and regions globally, with a very broad scope of involvement. At the same time, as a new phenomenon, the regulatory framework for cryptocurrency and digital assets is still immature worldwide, and the policies, administrative regulations, and laws of various countries are continuously changing. In this context, from a practical perspective, the FTX recovery trust does not possess the capability to accurately, authoritatively, and dynamically assess the legal systems of various countries. Even if it claims in its motion that it has "studied the judicial conditions of various countries," as we pointed out earlier, its description of the legal situation in China contains obvious errors—citing several policy and guiding documents that are neither judicial precedents from Chinese courts nor legally binding norms issued by legislative bodies. More seriously, even the interpretation of these policy documents is significantly distorted and exaggerated. These documents are intended as principled guidance for specific financial activities and market access regulation and do not prohibit or deny Chinese citizens from legally receiving overseas debt repayments. However, the FTX recovery trust interprets this as a basis for "inability to make payments," which is a misinterpretation and overextension of the policy's semantics, using it as a reason to exclude Chinese creditors, severely deviating from the caution and accuracy that should be applied in legal matters. Such errors highlight a key issue: as a bankrupt debtor, the FTX recovery trust neither has the authority to determine the applicability of the law nor the practical ability to accurately assess the legal risks of various jurisdictions. Yet, the "restricted jurisdiction" list formed by its subjective judgment is used to determine the payment eligibility and timing for certain creditors, a practice lacking legal foundation and objective standards, which is extremely irresponsible towards creditors and undermines the legal fairness of the entire bankruptcy process. At the same time, the large-scale legal service expenditures, expert hiring, and procedural delays surrounding this mechanism further increase the economic and time costs of the bankruptcy process, eroding the assets that should be prioritized for creditor repayment, ultimately harming the collective interests of all creditors. For the above reasons, we respectfully request the court to clearly determine that the FTX recovery trust has no authority or ability to establish "restricted jurisdictions," and that the related motion should be dismissed to ensure the legitimacy, fairness, and efficiency of the bankruptcy process.
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The new motion from FTX, which aims to introduce the concept of "restricting jurisdiction" to categorize creditors, may directly affect the return of 5% of creditors from China. This motion easily leads people into the trap of self-certifying whether cryptocurrency is legal in a certain jurisdiction, while forgetting that the FTX Recovery Trust is a non-profit organization focused on resolving creditor-debtor relationships and fulfilling debt repayment. Their main task is to complete the repayment to creditors, and their actions related to debt repayment are unrelated to cryptocurrency transactions and payments; essentially, it is a process of debt repayment conducted in US dollars. So, what does this have to do with the policies and regulations regarding cryptocurrency in various countries? Regarding the regulation and laws of cryptocurrency in different countries, does the FTX Recovery Trust have the ability to clearly articulate the policies and legal regulations of each country? Can they ensure that the interpretation of policies and regulations is objective and fair? Not to mention the significant matter of determining whether creditors should receive their claims based on such interpretations. Taking China as an example, the motion references the policy documents from various ministries regarding ICOs from 2017, attempting to illustrate that repaying Chinese creditors will face legal risks. There are obvious errors in this: 1. The 2017 ICO announcement is a policy document, not a law or regulation; it merely represents the regulatory intentions and direction of administrative agencies. 2. The original text restricts domestic banks and financial institutions from providing services for virtual currency issuance, and does not restrict Chinese creditors from legally obtaining their compensation for claims. This indicates that FTX neither has the capability nor the legal basis to establish "restricting jurisdiction". To use such subjective interpretations and policy documents to determine whether creditors can receive compensation is an extremely irresponsible act. Conversely, if the interpretation of policy documents can serve as the basis for defining "restricting jurisdiction", then in the countries where claims have already been issued, it is also possible to interpret "restricting jurisdiction" through local administrative documents. Considering fairness and justice, since 49 countries are to be categorized as "restricting jurisdiction", shouldn't FTX be required to provide policy interpretations from the countries where claims have been issued? If there are contradictions in the policy interpretations, should the entire issuance of claims be reconsidered? In the FTX case, only 5% of creditors are from the US, while 95% are overseas. According to the requirements for fairness among similar creditors in US bankruptcy law, FTX should provide judicial interpretations from all countries or jurisdictions where the 95% of creditors are located to slightly explain how to categorize "restricting jurisdiction" and "non-restricting jurisdiction". However, cryptocurrency is a new phenomenon, and its development varies across countries; the evolution of laws and regulations is also dynamic. With judicial interpretations and policy interpretations from over a hundred countries, can the FTX team manage this? Can they ensure objectivity and fairness? Can they guarantee there is no bias? Therefore, the result of this subjective and arbitrary motion is: 1. It consumes a large amount of legal resources, funds, and time, which will be borne by all creditors. 2. It fails to yield an objective and fair result, affecting bankruptcy liquidation and the bankruptcy process. 3. It causes secondary harm to affected creditors, resulting in indelible impacts. Thus, the judge should reject this motion, return to the creditor-debtor relationship, and urge FTX to promptly repay creditors from various countries equally, ensuring fairness and justice in the US bankruptcy process. P.S.: Edited on airplane Wi-Fi, unable to make precise modifications, but the overall meaning has been expressed.
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