- FTX customers object to a compensation plan that excludes crypto market gains over the past year.
- More than 80 individuals have filed objections challenging the valuation strategy.
- FTX pegs customers’ digital assets value to the date of bankruptcy filing to settle claims in U.S. dollars.
Several former customers of the now-bankrupt crypto firm FTX are rallying against the proposed bankruptcy plan, claiming it unfairly excludes them from the substantial gains in the crypto market over the past year. According to Bloomberg, more than 80 individual customers have submitted objections, urging a U.S. judge to reconsider the repayment strategy outlined in the plan.
FTX, led by founder Sam Bankman-Fried, faced a significant downfall amid fraud allegations, ultimately resulting in its collapse. The company filed for bankruptcy on November 11, 2022, leaving numerous customers with their crypto assets trapped on the platform. The subsequent conviction of Bankman-Fried for orchestrating a massive fraud added complexity to the bankruptcy proceedings.
The proposed plan aims to peg the value of customers’ digital assets to the date of FTX’s bankruptcy filing and settle claims in U.S. dollars rather than returning the original crypto coins. This approach has triggered dissatisfaction among customers who argue that it fails to account for the substantial increase in the prices of Bitcoin and other digital currencies during the past year.
Bitcoin holders, for example, are slated to receive $16,871 for each BTC based on the filing date’s valuation. However, with Bitcoin surging past $48,000, customers argue that this valuation does not accurately reflect the current market conditions.
The bankruptcy team, led by Chief Restructuring Officer John J. Ray III, has been actively working to recover cash and crypto assets. FTX got court approval to sell the crypto held on the platform, creating a sizable fund to be distributed among customers. However, objections from more than 80 customers highlight discontent with the plan’s proposed valuation method.
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