Zinger Key Points
- FTX proposes repaying customers based on November 2022 cryptocurrency values, meaning a Bitcoin valued at $16,800, frustrating customers.
- FTX seeks court approval so millions of users can vote on its repayment plan promising cash returns.
Bankrupt crypto exchange FTX is seeking court approval to allow its millions of customers to vote on a plan that would repay them in cash, but some customers are unhappy with the terms.
What Happened: FTX claims it has recovered $16 billion in assets, including $12 billion in cash, enough to repay all customer claims in full, Reuters reported.
However, the sticking point is how FTX is valuing those claims.
The company wants to base repayments on cryptocurrency prices from November 2022, when it filed for bankruptcy.
This means a customer with one Bitcoin BTC/USD on FTX would receive around $16,800, far less than Bitcoin’s current value of roughly $60,000.
This has angered some customers who argue the plan shortchanges them and doesn’t reflect the recent rise in crypto prices.
They’ve filed lawsuits seeking full repayment based on current valuations.
“The plan’s ‘full recovery’ is nothing of the sort,” objecting creditors claim, accusing FTX’s voting forms of misleading customers.
Also Read: German Government Continues Bitcoin Liquidation, Transfers 400 BTC To Exchanges
Why It Matters: The FTX collapse, spurred by alleged misuse of funds by former CEO Sam Bankman-Fried (who is now serving a 25-year prison sentence), left millions facing financial losses.
FTX argues returning the original cryptocurrency is impossible as those funds are missing.
John Ray, the turnaround specialist leading FTX, says cash is the only fair way to repay such a diverse group of creditors holding various cryptocurrencies with fluctuating values.
He emphasizes the need for an even distribution, stating, “We cannot pay one creditor more without taking it from another.”
FTX claims 98% of its customers could receive full repayment within 60 days if the court approves the plan.
A faster option would exist for those owed less than $50,000.
The future of the plan hinges on Judge John Dorsey’s decision on FTX’s disclosure statement.
If approved, creditors will have until mid-August to cast their ballots.
Read Next: Bitcoin Rebounds From ETF Outflows, Back Above $61K
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