FTX creditors want “in-kind” cryptocurrency payments rather than discounted prices in 2022

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Written by Rock Buivy
Post Date: 15 Jan, 24

In todays news section of Crypto-betting.org – FTX creditors claim that the idea for cryptocurrency valuation is unfair to those who own Bitcoin and other erratic assets.

A number of FTX customers have asked a US bankruptcy judge to stop the now-defunct cryptocurrency exchange from appraising their investments in cryptocurrencies using 2022 values.

They contend that FTX’s strategy prevents them from profiting from the recent spike in cryptocurrency prices.

The Official Committee of Unsecured Creditors stated that they believe the best approach to accelerate the Chapter 11 confirmation and simplify the claim reconciliation procedure is to estimate claim values collectively, as suggested in the motion.

The Debtors’ motion says as follows:

“Crypto deposits, which have increased in value by almost $5 billion since the petition date, must be returned to customers in kind and cannot be used to settle administrative claims, among other things, if the court rules that they are not the estate’s property“

In line with the terms of the bankruptcy plan, FTX intends to pay back consumers in US dollars, which will be decided by the value of cryptocurrencies on November 20, 2022, when FTX files for bankruptcy.

Although FTX argues that this date must be used to assess claims under U.S. bankruptcy law, consumers counter that this approach undervalues cryptocurrencies, which have increased dramatically since the 2022 market trough.

FTX creditors: statement of official committee
FTX creditors: statement of official committee

An activist for FTX creditors, Sunil Kavuri, made comments on X (formerly Twitter) on his attorneys, Moskowitz and Boies, who were opposing the debtor’s move to estimate claims.

Additionally, Kavuri clarified that since property rights are still up for debate, the attorneys contend that clients need to get “at least the value of crypto back.”

Since FTX filed for bankruptcy, the prices of three major cryptocurrencies that its clients own – Bitcoin, Ether, and Solana – have increased dramatically. FTX customers have also protested the company's plan to value its equity shares and token, FTT, at $0.

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Under the bankruptcy proposal, consumers’ equity in FTT and FTX would be eliminated to the tune of about $700 million.

FTX claimed that the only workable way to start customer repayments is to base cryptocurrency pricing on the date of the bankruptcy petition in a Dec. 27, 2023, court filing.

According to FTX, courts have allowed other insolvent cryptocurrency companies, such as Celsius Network, BlockFi, and Voyager Digital, to evaluate their customers’ claims using prices as of the petition date.

History of FTX bankruptcy: who are FTX creditors?

The Liquidation of FTX Digital Markets Limited ("FTX Digital") is governed by The Supreme Court of The Commonwealth of The Bahamas (the "Supreme Court") and is being implemented by the Joint Official Liquidators ("JOLs").

Chapter 11 of the U.S. Bankruptcy Code was used to file for bankruptcy on behalf of the other members of the FTX Group and related corporations in the days that followed the first winding up petition.

Customers of FTX.com were urged to deposit USD fiat currency with FTX Digital, the main business in the group permitted to operate as a digital assets exchange, starting in January 2022. Other currencies were added subsequently. Additionally, as of May 13, 2023, FTX.com revised its client Terms of Service, designating FTX Digital as the principal counterparty for FTX.com customers on the “FTX International” (non-US) platform.

It’s possible that users who registered on FTX.com were unaware of their status as creditors of FTX Digital, FTX Trading Limited, or another company in the group.

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Written by
Rock Buivy
Over the years, I've dedicated countless hours to researching and analyzing various crypto betting platforms, understanding their features, strengths, and weaknesses. This knowledge has allowed me to produce in-depth, well-rounded reviews that help users make informed decisions when it comes to choosing the right platform for their needs.