A group of previous FTX customers urges a U.S. court to modify the proposed repayment approach in their bankruptcy case.
The former customers contend that the current proposal unjustly excludes them from the significant increase in Bitcoin and other cryptocurrencies over the past year. Bitcoin is up by nearly 170% in a year, reaching $49,000 today for the first time in almost two years after yesterday’s historic ETF approval by the SEC.
Over 80 individuals with their crypto assets locked in FTX have submitted objections to the plan. This plan suggests fixing the value of their assets to Nov. 11, 2022, the date FTX declared bankruptcy, with repayments in U.S. dollars rather than the original cryptocurrencies.
After Sam Bankman-Fried’s conviction for perpetrating extensive fraud, leading to FTX’s downfall, a team of bankruptcy specialists, headed by John J. Ray III, has been actively working to maximize the recovery of cash and crypto assets. This team has received court approval to liquidate the crypto holdings on the platform, aiming to accumulate a multi-billion dollar fund to reimburse customers.
The cryptocurrency’s value on FTX determines the claim size for each customer at the time of its Chapter 11 filing. For instance, Bitcoin owners are entitled to a repayment of $16,871 per coin based on that date’s value, despite Bitcoin’s current rally.
The FTX bankruptcy team has argued in court documents that calculating the exact value of each customer’s digital portfolio is impractical due to the sheer volume of claims. In bankruptcy court terminology, this process would require individual liquidation of all customer claims by the various FTX entities.