The now-bankrupt FTX, once one of the best cryptocurrency exchanges globally, will reportedly ask the court to allow customers to vote on its proposed liquidation plan to repay losses.
Customers Frown On FTX’s Payback Plan
With its collapse in November 2022, approximately 9 million FTX customers and investors suffered billions of dollars in losses. Since its bankruptcy filing, the company recovered roughly $16bn with which to repay the aggrieved customers. This includes $12bn in cash.
Based on a Reuters report, FTX plans to ask US Bankruptcy Judge John Dorsey to greenlight its disclosure statements and let customers vote on the compensation plan. Some former FTX customers do not however agree with the disclosure statements, indicating that FTX wants to repay them at the much lower November 2022 cryptocurrency prices.
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Although the said judge already approved the valuing claims, these customers claim this is unfair as they are not profiting from the recent hike in crypto values. Bitcoin (BTC) closed Monday, 24 June 2024, trading at $60,266.28 per token. FTX proposed a cash payout of $16,800.
These wronged customers do not want the vote to proceed, claiming the liquidation plan is unsound. They filed separate lawsuits which allege that FTX never owned any trader deposits and must therefore repay them at current crypto values. These creditors said:
Customers must be made aware that the plan’s ‘full recovery’ is nothing of the sort.
John Ray, a “turnaround specialist” who took the FTX wheel after its Chapter 11 bankruptcy filing, indicated the company cannot repay the original crypto deposits. According to Reuters, he said those “funds are long gone, stolen by former CEO and founder Sam Bankman-Fried”, who is currently serving a 25-year prison stint.
