FTX Debtors Estate filed a Chapter 11 amendment to its reorganization plan today, leaving investors’ creditors dazed as to what’s next for the defunct exchange. According to the proposed plan, the estate, led by CEO John Ray III and Sullivan & Cromwell’s legal team, seeks to value its cryptocurrency claims at what they were when the company filed for bankruptcy last year, rather than at their current market value.
FTX Debtor’s Resolution Plan
The collapse of FTX in November 2022 sent ripples throughout the cryptocurrency industry, which are still being felt today, a year later. The collapse sent already struggling cryptocurrency prices plummeting further, leading some to wonder if it could be the end of the thriving cryptocurrency industry.
At the time of the FTX bankruptcy, the value of Bitcoin was about $17,000, less than a quarter of its all-time high of $69,000. However, since then the cryptocurrency industry has made significant progress toward recovery, with Bitcoin currently trading at $42,000.
According to new documents In the U.S. Bankruptcy Court for the District of Delaware, FTX’s debtor estate requested that the value of customer claims against the exchange be equal to the value of the accounts and assets when the cryptocurrency exchange collapsed. Once approved, this means your cryptocurrency assets will be converted to cash and then paid out to creditors.
FTTUSD currently trading at $3.730 territory. Chart: TradingView.com
FTX Debtor has applied for reorganization. plan
Most importantly, it ignored the FTX TOS, which states that digital assets are the property of users and not FTX transactions.
Under the plan, digital assets will be valued based on their petition date conversion rate (price). pic.twitter.com/WTj07nlOP5
— Sunil (FTX Creditor Champion) (@sunil_trades) December 16, 2023
As expected, the plan sparked controversy, especially among FTX creditors. Creditors argue that their claims can only be made whole if they are based on the value of the assets. According to Sunil Kavuri:a blatant FTX creditor, goes against FTX’s Terms of Service, which “state that ownership of digital assets belongs to customers, not the exchange.”
FTX’s plan evaluates cryptocurrency claims at the petition price
The reorganization plan runs counter to FTX’s terms of service, which state that ownership of digital assets belongs to customers and not the exchange.
“This plan aims to create the best economic outcomes for everyone…,” the debtors said. pic.twitter.com/cgj77gcHrG
— Sunil (FTX Creditor Champion) (@sunil_trades) December 17, 2023
Uncertainty regarding FTX’s ability to reimburse users in full;
FTX owed more than $8.7 billion to customers and creditors when it filed for bankruptcy. American judge Bankruptcy exchange authorized to liquidate cryptocurrency holdings worth more than $3.4 billion. Another order in November It gave the exchange permission to sell $873 million worth of cryptocurrency trust assets.
FTX’s real estate also experienced this. Various efforts to recover funds Payments are made to creditors and users. However, the company has yet to provide a clear timeline for repaying users in full, leaving many people even wondering if they will ever receive full payment in their cryptocurrency assets.
FTX Recently moved 1,593 ETH worth $3.66 million was stored in a personal wallet linked to Coinbase by on-chain tracker Spotonchain. Meanwhile, former CEO Sam Bankman-Fried remains in prison ahead of his sentencing scheduled for March 2024.
Featured image from iStock