Recently, a US bankruptcy court granted FTX approval to proceed with a liquidation plan that would involve paying customer claims in cash. The plan, which is set to pay customers based on the cryptocurrency prices at the time of FTX’s collapse in November 2022, has sparked controversy among creditors. Despite objections from customers who believe they are entitled to higher amounts due to the rise in crypto prices, the court has allowed FTX to move forward with their cash payment proposal.
Creditors have raised concerns about the discrepancies in the proposed cash payments compared to the current value of the cryptocurrencies. For example, customers who held one Bitcoin with FTX in 2022 would receive $16,800 under the plan, instead of the current value of each BTC. The creditors argue that FTX is misleading customers by suggesting a full recovery with interest, when in reality, it falls short of that promise. FTX CEO John J. Ray III defended the cash payment plan by stating that it is impossible to return the crypto that customers had deposited due to the company’s bankruptcy filing.
Despite FTX’s efforts to reassure customers about the fairness of the cash payment plan, some creditors remain skeptical. They believe that FTX should be held accountable for the appreciation in crypto prices and should adjust the payment amounts accordingly. However, Ray emphasized that increasing the payments for some customers would ultimately result in taking money away from others. FTX aims to finalize the plan by seeking approval from the bankruptcy court on Oct. 7, after accepting votes from customers until Aug. 16.
Reports from Bloomberg suggest that FTX currently has $11.4 billion in assets, with the potential to increase to $12.6 billion by the end of October. The company’s assets will play a crucial role in determining the total amount available for liquidation payments to customers. Additionally, FTX has indicated that a majority of customers could receive access to the full amount owed within 60 days of the court approving the wind-down plans. A faster payment option is also available for claims under $50,000, signaling FTX’s commitment to expediting the process for smaller claims.
The controversy surrounding FTX’s liquidation plan highlights the complexities involved in balancing customer claims with the company’s financial constraints. While FTX seeks to provide a fair resolution for all parties involved, the differing opinions among creditors indicate the challenges that lie ahead in reaching a consensus on the final payment amounts. The outcome of the court’s approval of FTX’s plan will undoubtedly have significant implications for both the company and its customers.