FTX exchange compensates its customers with the value of their cryptocurrencies at the time of its bankruptcy!

Cryptocurrency exchange FTX, facing bankruptcy since November 11, 2022, announced a payment plan that sparked mixed reactions among its former clients.
Based on the value of funds at the time of bankruptcy, this plan may seem reassuring on the surface. However, it can ultimately represent a significant financial loss for many users.

FTX exchange unveils a controversial plan to compensate clients and investors

Cryptocurrency exchange FTX, which declared bankruptcy on November 11, 2022, announced in its reorganization plan its intention to compensate the funds lost by its clients based on the value of their assets at the time of bankruptcy.

This announcement may seem reassuring to some former users of the platform, but it represents a major financial loss for many.
When FTX fell, the market was at its lowest level over the past two years.
Since then, the cryptocurrency market price has risen by almost 85%, and the price of Bitcoin against the US dollar has risen by more than 140%.

Sunil Kavuri, the FTX creditor who lost about $2 million after the bankruptcy, criticized the repayment plan in a post on X.
He also argued that FTX’s proposed payment plan violates the platform’s terms of service. Which typically ensures that customers own their digital assets, not the company.

The FTX Exchange’s reorganization plan is designed to compensate clients fairly while avoiding lengthy legal proceedings.
Such as the one that occurred in the Mt.Gox case that has been ongoing since 2014. However, this plan is subject to a vote in which only certain creditors are entitled to vote.
So it could be imposed on some creditors who would not have a say. Although the decision may harm some parties affected by bankruptcy.
However, it aims to ensure an effective resolution of the case, according to the FTX filing.

The major creditor groups and clients involved in the bankruptcy proceedings have already approved the plan.
It will be put to a vote by other creditors later next year, before being submitted for final evaluation by US Bankruptcy Judge John Dorsey, who will have to deem the plan “fair and equitable” to apply generally to FTX exchange customers.

FTX pays about $1.3 million a day in bankruptcy fees!

This situation gets even more frustrating when we learn that the FTX exchange pays about $1.3 million per day in bankruptcy fees.
It is paid to different companies such as Sullivan and Cromwell, or Alvarez and Marshall.
This brings the total legal costs paid by FTX since its bankruptcy to approximately $1.45 billion, more than the $1.42 billion owed to its clients.

This disparity between debts raises concerns about the feasibility of making such expenditures, especially since they could have contributed to compensating a portion of bankruptcy victims.

Also, the IRS demanded $44 billion in taxes from the company in April 2023.
Given that the FTX exchange was having difficulty paying this amount, the claim was revised twice and reduced to $24 billion.

Share your love