Originally published on: September 28, 2024
FTX creditors are in for a disappointing surprise as they are set to receive only 10-25% of their cryptocurrency holdings back, according to recent bankruptcy documents revealed by creditor Sunil Kavuri.
The decision to reimburse creditors based on petition date prices, when cryptocurrency values were significantly lower, has sparked outrage among the FTX creditors. Kavuri expressed his frustration with the situation, stating that it is unfair for investors to be reimbursed at lower values than what their assets are worth today.
Many other FTX creditors have joined Kavuri in speaking out against the plan, calling the decision “disgusting” and labeling the collapse of FTX as a scam. The dissatisfaction has grown even further with accusations that Sam Bankman-Fried, the founder of Emergent Technologies, violated the terms of service by using client funds to pay off debts.
As the FTX estate moves forward with its reorganization plan, objections from creditors and legal challenges continue to pile up. The bankruptcy trustee overseeing the process in the United States has raised concerns about the level of legal protections granted to the representatives of the FTX bankruptcy estate, calling it an anomaly in similar situations.
Additionally, the United States Securities and Exchange Commission has hinted at possible objections to the reimbursement plan, particularly if stablecoin payments are used to repay clients.
The ongoing chaos surrounding the FTX bankruptcy is likely to unfold further in the coming days, leaving creditors and users in a state of uncertainty and frustration.
