- FTX creditors might only recover 10%-25% of their cryptocurrencies, as per revised bankruptcy documents shared by Sunil Kavuri.
- Payouts to creditors are based on crypto values from the filing date, when prices were significantly lower.
The latest developments in FTX’s bankruptcy case have aroused heated debate and alarm among creditors. Sunil Kavuri, an FTX creditor, revealed new bankruptcy paperwork that indicates that creditors are only likely to receive 10-15% of their crypto holdings.
FTX is transferring 18% of DOJ forfeiture funds up to $230m to FTX equity holders (Plan supplement)
FTX crypto holders are getting 10% to 25% of their crypto back pic.twitter.com/3f6BePpoNU
— Sunil (FTX Creditor Champion) (@sunil_trades) September 28, 2024
This refund is based on the value of cryptocurrencies at the time of FTX’s filing, when prices were much lower, with Bitcoin valued at approximately $16,000. This decision has left many creditors feeling disappointed and undercompensated, particularly given the significant growth in crypto values since then.
Stockholders Payout Sparks Anger Among FTX Creditors
What makes the matter even more problematic is FTX’s desire to distribute around $230 million, or nearly 18% of its available funds, to its stockholders. Many creditors have expressed fury at this move, calling it not just unfair but even “criminal,” considering the tremendous financial losses they have suffered.
Despite receiving support from 95% of creditors, the modified plan has not been without controversy. There is rising opposition to the idea, particularly due to concerns about prospective taxation on returned assets, which many fear might further reduce the already meager payment creditors will receive.
Beside that, our prior reports indicate that a former executive of Alameda Research, which is closely tied to FTX, was sentenced to two years in prison. This sentencing occurred after the prosecution made a strong argument to the court.
Caroline Ellison, a key figure in this case, was found to be “extremely guilty” of the crimes linked to FTX’s collapse, yet her assistance with police was acknowledged and praised throughout the proceedings.
Meanwhile, as we previously noted, FTX’s previous CEO, Sam Bankman-Fried, has taken a more defensive position. He has submitted a 102-page appeal requesting a retrial, arguing that the judge supervising his fraud and conspiracy case was biased, undermining his argument.
Bankman-Fried contended in its appeal that FTX was not technically bankrupt at the time it filed for bankruptcy, but rather was experiencing a liquidity problem. He claimed that the corporation owned illiquid assets worth billions of dollars that could be utilized to reimburse customers.
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