According to newly amended bankruptcy documents released by FTX creditor Sunil Kavuri, FTX creditors can only recover between 10-25% of their cryptocurrency holdings.
Activist and FTX creditor explained that creditors will receive reimbursements based on the value on the day of filing, when cryptocurrency prices had plummeted with Bitcoin’s price at the time the petition was filed being around $16,000.
Kavuri Chia that the decision to repay creditors and customers at the price on the filing date caused outrage in the FTX creditor community:
“Cryptocurrency holders were not entitled to their full value at the date of filing, as the debtors, the Department of Justice, and Judge Kaplan have confirmed. Many FTX customers continue to suffer from mental anguish, panic attacks, divorce, and suicidal thoughts because their life savings were stolen and the assets have not been returned.”
Other creditors also agreed with Kavuri's view.
“It's disgusting that they sneaked this into the plan so late, after the vote,” said one user.
“I don’t understand why the law can’t protect us, the investors,” another creditor asked, describing FTX’s collapse as a scam.
Another creditor commented: “What a shame, we have been cheated twice!”
Source: Sunil Kavuri .
Kavuri also argued that Sam Bankman-Fried violated FTX’s terms of service and the definition of ownership by using customer funds to pay off outstanding debts:
“The terms of service clearly state that ownership of digital assets belongs to FTX customers. Sam was clearly convicted of violating the terms of service and diverting customer funds to pay off Alameda’s debt and buy Robinhood shares.”
On September 6, 2024, FTX Estate reached an agreement with Emergent Technologies – an entity founded by Bankman-Fried – to secure $600 million in Robinhood shares to pay off creditors.
Kavuri and his supporters are not the only ones opposing FTX’s restructuring plan. In August 2024, a U.S. trustee overseeing the bankruptcy process objected to the plan, arguing that it granted too many legal protections to the managers and representatives of the FTX estate.
In legal filings, trustee Andrew Vara stressed that these protections are not the norm in similar cases and are a troubling anomaly:
“Such immunity would far exceed the protection that insolvency professionals, whose employment and compensation are subject to the Court’s approval and supervision, receive throughout the case.”
The U.S. Securities and Exchange Commission (SEC) also said it could object to FTX’s restructuring plan if the exchange decides to reimburse customers in stablecoins.
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Annie
According to Cointelegraph
