In a recent development, a US bankruptcy court has given FTX the green light to collect votes on a liquidation proposal that would compensate customer claims with cash. The plan, which is based on crypto prices at the time of FTX’s collapse in November 2022, has sparked controversy among some customers who argue that they deserve higher payments due to the surge in crypto prices.
Numerous creditors have voiced their objections to FTX’s plan, claiming that the company is overly optimistic about providing a full recovery with interest. They argue that the proposed payments fall short of what customers are entitled to receive, given the current value of cryptocurrencies. Customers holding one Bitcoin with FTX in 2022, for example, would only receive $16,800 under the plan, much lower than the present value of the digital assets.
FTX CEO John J. Ray III defended the company’s approach, highlighting the impossibility of returning the crypto deposits due to the financial constraints faced during the bankruptcy. Ray emphasized that FTX held only a fraction of the Bitcoin and Ethereum indicated in customer balances at the time of collapse, making it unfeasible to meet the demands of all creditors seeking appreciated value.
Despite the concerns raised by some customers, FTX aims to adhere to an expedited payment schedule, with 98% of customers expected to receive their owed amounts within 60 days of the court’s approval of the wind-down plans. Additionally, a swift payment option has been designed to cover claims below $50,000 to facilitate a quicker resolution for smaller creditors.
Reports from Bloomberg suggest that FTX holds $11.4 billion in assets presently, with the potential for an increase to $12.6 billion by the end of October. This growth in assets could play a crucial role in determining the final payouts to customers under the liquidation plan, affecting the overall satisfaction of the creditors involved.
The FTX liquidation saga underscores the complexities of balancing customer expectations with financial constraints in bankruptcy proceedings. As the company navigates through the intricacies of the liquidation process, it remains to be seen how the final payouts will be distributed and whether all stakeholders will be content with the resolution reached.
