Former FTX Client Seeks Cryptocurrency Repayment Amid Current Market Rise
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A group of former FTX clients are urging a U.S. court to modify proposed repayment options in its bankruptcy case.
Former customers believe the current proposal unfairly excludes them from the massive growth in Bitcoin and other cryptocurrencies over the past year. Bitcoin is up nearly 170% in a year, reaching $49,000 today for the first time in nearly two years following the SEC’s historic approval of an ETF.
Over 80 individuals have their crypto assets locked in FTX submitted Opposition to the plan. The plan proposes fixing the value of the asset until November 11, 2022, the date FTX declares bankruptcy, and repaying it in U.S. dollars instead of the original cryptocurrency.
Following the conviction of Sam Bankman-Fried for massive fraud that led to the downfall of FTX, a team of bankruptcy experts led by John J. Ray III has been working aggressively to maximize the recovery of cash and crypto assets. The team has received court approval to liquidate crypto assets on the platform, aiming to amass billions of dollars to repay customers.
The value of the cryptocurrency on FTX determines the amount of each customer’s claim when filing under Chapter 11. For example, despite Bitcoin’s current rise, Bitcoin owners are entitled to be repaid $16,871 per Bitcoin based on their value on that date.
FTX’s bankruptcy team argued in court filings that it would be impractical to calculate the exact value of each customer’s digital portfolio due to the sheer volume of claims. In bankruptcy court terms, this process requires each FTX entity to conduct separate liquidations of all customer claims.
