Following the submission of a proposal by FTX estate debtors to reimburse customer assets based on their value as of Nov. 11, 2022, numerous objections have been raised by customers. A notable objection comes from an FTX client in France, who criticizes the estate for “depleting creditor funds by imposing exorbitant charges for their services.” This customer expresses dissatisfaction with the compensation in fiat currency, particularly given the valuation of crypto assets at a point when “markets were at their lowest in years.”
FTX Customers Rally Against Repayment Plan Citing Injustice in Crypto Asset Valuation
FTX clients have expressed significant dissatisfaction with the company’s reorganization plan, which proposed compensating customers in fiat currency based on the value of their crypto assets as of Nov. 11, 2022 — the day the now-insolvent crypto exchange declared Chapter 11 bankruptcy. For example, while bitcoin (BTC) currently trades just above $40,000, the “Digital Asset Conversion Table” values it at only $16,871 per coin. Following this proposal, the bankruptcy court docket has been inundated with several objections.
A customer from Portugal has pointed out that the bankruptcy process is causing “significant losses for creditors.” This client claims that “$500 million in fees” have been deducted, which he believes should instead be used to benefit the customers. He observes that this situation creates an incentive for certain parties to prolong the proceedings, thereby accumulating more fees. Moreover, this Portuguese individual argues that setting the value of crypto assets based on their Nov. 11, 2022, prices contradicts the terms of service (ToS).
Meanwhile, a French customer contends that reimbursing creditors based on the November 2022 valuation of their crypto effectively equates to “stealing” from the victims. In a letter to Judge Dorsey, this customer urges the judge to “intervene” to avert what they describe as a “second theft.” Another objector disputes the conversion table, noting that their claim’s value is 2.55 times higher than the specified date. They argue that approving this proposal would “unfairly prejudice a significant class of customers.” This client further points out that the FTX ToS clearly states that the crypto assets belong to the owners and should never have been co-mingled with other funds.
Ever since its unveiling in December 2023, the proposal has been met with a steady stream of objections, accumulating in the court docket hosted by the Kroll Restructuring Administration. Numerous creditors have submitted letters, suggesting various alternatives for the judge to consider, rather than adhering to the estate’s proposed strategy. Alongside these objections, there’s also a notable trend of claims being transferred to different entities. Current market values for FTX claims show sellers asking for $0.77 on the dollar, while bids are coming in at around $0.72.
What do you think about the objections to the proposed FTX reimbursement plan? Share your thoughts and opinions about this subject in the comments section below.