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Cryptocurrency News Articles
FTX Creditors Will Only Get 10-25% of Their Cryptocurrency Back, Newly Revised Bankruptcy Documents Reveal
Sep 29, 2024 at 05:04 am
The FTX creditor-activist explained that the creditors would receive reimbursements according to the petition date when cryptocurrency prices were much lower than today.
FTX creditors are set to receive only 10–25% of their cryptocurrency claims, according to bankruptcy documents shared by Sunil Kavuri, a creditor-activist.
The bankruptcy estate will reportedly reimburse creditors based on the cryptocurrency prices on the date the bankruptcy petition was filed, which were significantly lower than the current market prices. For example, Bitcoin ( BTC ) was trading at around $16,000 at the time of the filing, compared to over $65,000 as of today.
Kavuri told Cointelegraph that the decision to use the petition date prices sparked outrage among FTX creditors, with many expressing their dissatisfaction online:
“It’s disgusting they sneak this into the plan so late, after the vote.”
“I can’t understand why the law can’t protect us investors.”
“Disgraceful, we have been scammed twice!”
According to Kavuri, Sam Bankman-Fried also violated the FTX terms of service and the broader definition of property rights by using customer funds to pay outstanding debts.
On Sept. 6, 2024, the FTX estate reached an agreement with Emergent Technologies, an entity founded by Bankman-Fried, to secure $600 million in Robinhood shares to pay creditors.
Kavuri and his fellow creditors are not the only parties objecting to the FTX estate's reorganization plan. In August 2024, a U.S. trustee overseeing the bankruptcy challenged the plan, arguing that it provides excessive legal protections for the administrators and representatives of the FTX bankruptcy estate.
The trustee highlighted that these protections are not typically granted in similar cases and noted that theسرائ्यs bankruptcy, which involved a smaller scale of customer impact, did not provide such protections.
The U.S. Securities and Exchange Commission also stated that it may oppose the FTX reorganization plan if the bankrupt crypto exchange opts to reimburse customers using stablecoin payments.
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