On July 4, 2025, Sunil, a representative of FTX creditors, posted a screenshot of an FTX bankruptcy liquidation document on a social platform. The document showed that FTX would seek legal advice and that if the user belonged to a restricted foreign jurisdiction, the claimed funds might be confiscated.
Sunil also released a piece of data: 82% of the claim funds from restricted countries came from Chinese users.
However, since crypto transactions are not allowed in China, these users may be classified as illegal and thus be deprived of their claim eligibility. 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 furious, questioning the compliance reasons of the liquidation team as an excuse to shirk responsibility. Some people called FTXs decision American robbery and lamented that Chinese people are worse than dogs, with deep disappointment and helplessness between the lines. Some people believe that although China has strict restrictions on cryptocurrency transactions, user funds should not be directly confiscated, and FTXs decision lacks a clear legal basis.
After such a statement that may rewrite the global perception of creditors rights, the outside world is most concerned not only about whether FTX is acting in accordance with the law, but also about who is making the decision, according to what standards, and who the ultimate beneficiary is.
Who took over?
Taking over the ruins was a bankruptcy reorganization team from Wall Street: a liquidation team headed by restructuring veteran John J. Ray III as CEO and led by the veteran law firm Sullivan Cromwell (hereinafter referred to as SC).
John J. Ray, a veteran who specializes in the corporate corpse business, once took over the Enron bankruptcy case and brought nearly $700 million in revenue to SC in that trial of the century.
This time, he brought the same law firm team to take over FTX.
High salaries are not a problem, the problem is how high they are. According to public documents, SC partners earn up to $2,000 an hour, and John Ray himself charges $1,300 an hour. According to data disclosed by Bloomberg, as of early 2025, SCs cumulative reported legal service fees in FTX Chapter 11 bankruptcy proceedings have reached $249 million.
The assets that should have belonged to all creditors are being cut away piece by piece by a professional team. This is why FTX creditors have been accusing: They are repeating the Enron script.
Another strange thing is the speed at which FTX declared bankruptcy. It was not until the full draft of SBFs testimony to Congress was exposed that we learned how he was hunted two days before the bankruptcy application.
A draft of testimony prepared by SBF (Sam Bankman-Fried) to be submitted to Congress shows that FTX.USs general counsel, Ryne Miller, who also came from SC, worked closely with the liquidation team to force SBF and its management to quickly move towards Chapter 11 bankruptcy proceedings.
I received numerous threats from the Sullivan Cromwell people and Ryne Miller, SBF wrote in the affidavit. They even harassed my friends and family... Some people came to me crying.
But he had no chance to turn back. John Ray never responded to the five emails he sent.
He was just the previous protagonist in this exquisite plunder.
The bankruptcy application was suppressed in the midst of overnight bombing, panic and isolation. He wanted to continue raising funds to try to save the situation, but was kicked out of the stage in advance by the legal advisor he hired.
And the real game — over who takes over the company and who gets a share of its legacy — has just begun.
Who is dividing up FTX’s legacy?
The way this bankruptcy liquidation team handled FTX’s historical investment portfolio is infuriating and puzzling.
These portfolios were once important pieces in SBF’s plan to realize its dream of “effective altruism” and were also considered as valuable reserves for FTX’s comeback. However, they were sold off almost across the board by John Ray’s team, and most of them were sold at prices far below their true value.
The three most eye-catching transactions are enough to reveal the absurdity of the entire liquidation:
1) Cursor: $200,000 for $500 million of sighs
Cursor, known as the Vibe coding artifact in the AI circle, was sold at the original price in the liquidation after FTX invested $200,000 in the seed round. On the surface, it seems to be a good deal, but considering that Cursor has been valued at up to $9 billion by authoritative media such as TechCrunch and Bloomberg, this price is outrageous.
According to conservative calculations, FTX could have gotten back at least $500 million in share gains, but it was handed over to someone else under the manipulation of the legal team. There was even a sarcasm in the industry that it makes money faster than Trump, pointing out that the assets were sold in a particularly shady way.
2) Mysten Labs / SUI: Selling a 4.6 billion public chain dream for 96 million US dollars
Mysten Labs and the SUI chain it developed can be called the next Solana, with extremely high public chain expansion capabilities.
FTX acquired Mysten equity and subscription rights for 890 million SUI tokens in exchange for approximately US$100 million in 2022, but the liquidation team disposed of the assets for US$96 million in 2023, citing the reason of quickly recovering funds.
At its peak, the value of this batch of SUI exceeded US$4.6 billion, which means that the US$96 million at the time was only equivalent to 2% of its future value.
The community once joked that if SBF saw the SUI market in prison, he would probably be so angry that he would vomit blood.
3) Anthropic: Selling a 61.5 billion behemoth for $1.3 billion
Anthropic, founded by former OpenAI executives, focuses on AI safety. SBF personally invested $500 million and holds approximately 8% of the shares.
The liquidation team sold all its shares in two batches in 2024, earning a total of US$1.3 billion. The outside world initially considered this to be a good cash-out result, but less than a year later, Anthropics valuation soared to US$61.5 billion. Based on this calculation, FTXs 8% stake is worth nearly US$5 billion.
That means the bankruptcy liquidation team missed out on at least $3.7 billion in additional returns.
FTXs investment vision is correct, which almost no one will deny. They shot the bullet accurately before the wind came, bet on these companies at the most neglected moment, and got the core share.
But after FTX collapsed, those bets were treated as scrap metal.
In addition to these three typical cases, the FTX liquidation team used consistent operations to sell them out in transactions such as LedgerX, Blockfolio, and SOL token block auctions, causing huge controversy.
For example, when the SOL tokens were liquidated and auctioned in 2024, institutions such as Galaxy Trading and Pantera Capital bought them at low prices, and then the price of SOL skyrocketed, making extremely amazing profits, while the original creditors could only watch the opportunity slip away. According to reports from the Financial Times and Cointelegraph, FTX is believed to have missed at least tens of billions of dollars in potential appreciation in the disposal of high-quality assets.
Why did such a concentrated and short-term liquidation sale occur? John Ray said it was to lock up funds in time and avoid volatility risks, but industry analysts pointed out that such a reason could not explain why large-scale discounts were only made to familiar institutional friends, and many assets doubled in less than 6 months.
So there was a conspiracy theory that the liquidation team sold all the good stuff to the funds they were familiar with in a very short time, and they could charge sky-high lawyer fees, close the case quickly, and make a fortune in the end. The assets that originally belonged to the creditors were transferred to people closer to the center of power at a low price under the framework of reasonable compliance.
The value of shares, tokens, and options that were sold at low prices continues to grow; and those who were supposed to hold this growth can only watch their future being snatched away by others through the publicly displayed PDF.
Bankruptcy liquidation or legal robbery?
No industry is better at forgetting than the crypto industry. The market has now re-entered the pursuit of AI, stablecoins, and RWA. The crisis of 2022 seems to have passed, but the liquidation process is far from over.
Over the past three years, FTX’s assets have been cut, packaged, and auctioned off one by one, stripping away all the future of a platform and leaving only an empty shell.
The scale and complexity of FTXs bankruptcy liquidation are enough to be recorded in the history of global encryption, but what is really worthy of being included in the textbooks is probably the creditors collective disillusionment with the legal trust system.
On the one hand, John Ray and the liquidation lawyer team represented by SC received sky-high fees in a completely legal manner, and it is almost impossible for them to be held accountable by the judiciary. On the other hand, they added a shield to themselves through the exemption clause, so that they will not be held responsible even if they are questioned about malicious liquidation in the future.
For tens of thousands of retail investors who were robbed by the FTX crash, this is not redemption, but a second injury. You may miss the market, but being deprived of a fair chance to recover is the cruelest thing.
Currently, FTX’s bankruptcy assets are expected to be distributed globally for liquidation with a total of US$14.5 billion to US$16.3 billion. However, if users in China and other regions are ultimately unable to successfully claim compensation, it will mean another unresolved tragedy: some people are completely excluded from the legal system, and the funds that originally belonged to them are swallowed up by the cumbersome legal procedures and the gray area of bankruptcy lawyers.
What’s worse, the new proposal submitted by the FTX team to the bankruptcy court also included hidden clauses that exempt consultants from liability, making it almost impossible for creditors to sue or appeal.
Perhaps for the industry, the collapse of FTX is just the bottom of another cycle, but for the people trapped in it, especially tens of thousands of Chinese retail investors, this is not only the loss of funds, but also the end of hope.
The group of lawyers and consultants known as the professional liquidation team can decide the fate of hundreds of billions of dollars in assets with just a few lines of words, but no one leaves any chance for these ordinary investors to turn things around.
