A Revised Plan from FTX Evaluates Crypto Claims at the Time of Bankruptcy
The revised reorganization plan from FTX, filed with the US bankruptcy court in December 2023, proposes to evaluate customer claims based on their cash value at the time of FTX’s bankruptcy declaration on November 11, 2022.
This decision is noteworthy as it does not take into account the significant appreciation in cryptocurrency prices since that date.
For instance, Bitcoin, which was valued at around $17,000 during the bankruptcy, is now trading at over $42,000. This evaluation method could lead to substantial losses for creditors who will not benefit from the market price increase.
A Voting System for Creditors
This approach has prompted mixed reactions. On one hand, it adheres to the legal framework of bankruptcies, offering a clear and defined method for evaluating claims.
On the other hand, it raises ethical concerns as FTX clients may lose a significant portion of the actual value of their assets. Furthermore, this decision contradicts FTX’s terms of service which stated that ownership of digital assets belongs to the clients, not the exchange.
Creditors will have the opportunity to vote on the revised plan, but some may be compelled to accept the plan even if they disagree, if it is deemed ‘fair and equitable’.
