Bankruptcy lawyers for FTX are proposing a repayment plan for FTX customers that calculates the USD value of their holdings as of November 11, 2022. On that date, FTX originally petitioned for bankruptcy protection.
Back then, bitcoin was worth $16,871. At press time, bitcoin is worth about 150% more at $42,154.
Most customers opposed a repayment plan based on such inferior prices. Nevertheless, on Wednesday, a Delaware court ruled that bankruptcy judge John Dorsey has broad discretion to determine allowable methods for calculating bankruptcy claims.
With that approval and case law backing, Dorsey wrote, “I conclude that debtor’s use of the petition date for determining the value of the digital assets claims is appropriate.”
FTX executives Sam Bankman-Fried, Caroline Ellison, Nishad Singh, and Gary Wang have been found guilty of federal crimes. In particular, they improperly diverted FTX customer deposits into personal payouts, illegitimate corporate expenses, and a proprietary trading company that they controlled called Alameda Research.
By the time FTX filed for bankruptcy protection, Alameda owed billions of dollars to FTX that it could never repay.
As claims mounted against the defunct crypto exchange and trading company, the tally reached mind-boggling numbers. The total bankruptcy claims now exceed $2 quintillion. There were millions of customers and countless corporate counterparties who were harmed as the once-$32 billion FTX collapsed to $0.
Each claim, when tallied separately (and therefore, double-counted), sums to more money than the $454 trillion that exists on earth.
Read more: FTX-funded charity Effective Ventures agrees to return donations
Incredibly, however, FTX bankruptcy attorneys are still hoping for a so-called pay-in-full plan. It assumes that US regulators, including the IRS and SEC, will subordinate behind claims of regular customers — allowing FTX to repay customers and not pay its multi-billion dollar regulatory fines.
This is a big assumption. For context, the IRS alone demanded $24 billion from the estate. Other regulators and government entities around the world have also made large demands.
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Source: https://protos.com/ftx-customers-to-be-repaid-at-16871-bitcoin-prices/