“Grossly Unfair”: FTX Customers Ask Court to Block Valuation Plan

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  • FTX customers have asked Judge John Dorsey to oppose the exchange’s valuation plans. 
  • The plan values crypto assets as of November 2022, the rock bottom of the bear market. 
  • FTX said the plan is the most feasible way to move forward and repay customers.

Customers of the troubled cryptocurrency exchange FTX have asked a US Bankruptcy Judge to stop the exchange’s proposed plan to value crypto assets using November 2022 prices, Reuters reported

Over the past week, dozens of the crypto exchange’s customers from around the world have written letters to Judge John Dorsey in Delaware, who is overseeing FTX’s Chapter 11 proceedings. The customers argue that the crypto exchange is preventing customers from benefiting from a rebound in crypto prices. 

Last year, FTX disclosed a valuation plan that valued crypto assets as of the time it went bankrupt in November 2022. According to the defunct exchange, the valuation plan aligns with US bankruptcy laws. 

However, crypto prices have rebounded significantly since they bottomed out in November 2022. Bitcoin’s price has climbed to over $46,000 from $16,871.63, and Solana’s price has risen to around $98 from $16.25. Over the same period, the price of Ether has nearly doubled. 

As noted in the report, an FTX customer told Judge John Dorsey that the proposed plan is nothing but a “second act of theft.” Similarly, others called the valuation plan “grossly unfair” to holders of Bitcoin and other volatile assets. In addition, they argued the plan would result in preferential treatment for customers who held stablecoins and investors who purchased FTX bankruptcy claims for a low price. 

Meanwhile, FTX’s decision to value its stock shares and its own proprietary cryptocurrency token, FTT, at $0 has also drawn criticism from some customers. Under the bankruptcy plan, over $700 million in FTT and FTX stock owned by FTX customers would be wiped out.

With the deadline to oppose the valuation price over, FTX customers now look ahead to a January 25 court hearing on the proposed cryptocurrency prices. FTX has previously argued that the valuation plan is the only feasible way to move forward and repay customers. 

Furthermore, FTX claims courts have allowed other bankrupt crypto firms like Celsius Network, BlockFi, and Voyager to value assets as of petition dates. FTX’s official creditors committee and an ad hoc group of non-U.S. customers have agreed to support FTX’s proposal.

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