A Group of Former FTX Customers Seeks Modification of Bankruptcy Repayment Plan
A group of previous FTX customers is urging a U.S. court to modify the proposed repayment approach in their bankruptcy case. They argue that the current plan unfairly excludes them from the significant increase in Bitcoin and other cryptocurrencies over the past year, despite Bitcoin reaching $49,000 today for the first time in almost two years after the SEC’s ETF approval.
Objections to the Proposed Plan
More than 80 individuals with crypto assets locked in FTX have submitted objections to the plan, which suggests fixing the value of their assets to Nov. 11, 2022, the date FTX declared bankruptcy, with repayments in U.S. dollars instead of the original cryptocurrencies.
Bankruptcy Specialists Working to Recover Funds
Following Sam Bankman-Fried’s conviction for extensive fraud, a team of bankruptcy specialists led by John J. Ray III has been working to maximize cash and crypto asset recovery for FTX customers. The team has court approval to liquidate the platform’s crypto holdings and aims to accumulate a multi-billion dollar fund for customer reimbursement.
Calculating Claim Sizes
The value of each customer’s claim is determined by the cryptocurrency’s value on FTX at the time of its Chapter 11 filing. Despite Bitcoin’s current rally, Bitcoin owners are entitled to a repayment of $16,871 per coin based on that date’s value.
Challenges in Valuing Customer Portfolios
The FTX bankruptcy team argues that calculating the exact value of each customer’s digital portfolio is impractical due to the large number of claims. Individual liquidation of all customer claims would be required by various FTX entities, which is a complex process.
Hot Take: Former FTX Customers Demand Fair Treatment in Bankruptcy Repayment
A group of former FTX customers is demanding fair treatment in the bankruptcy repayment plan. They argue that they should not be excluded from the significant gains in Bitcoin and other cryptocurrencies over the past year. With Bitcoin reaching new highs, these customers believe they should receive repayments based on the current value rather than the value at the time of FTX’s bankruptcy declaration.
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