Fallen crypto exchange FTX has revised its Chapter 11 bankruptcy plan. According to the amended plan, FTX debtors say customers’ crypto claims will be retroactively set to the time when the exchange collapsed.
According to a recent filing, FTX amended its Chapter 11 bankruptcy plan. Debtors for the exchange explained that customer entitlement claims against FTX aimed at compensation would be based on the value as of the date FTX filed for bankruptcy in November 2022.
Crypto Claims Retroactively Set to Value When FTX Collapsed
The Debtors’ estate, led by current FTX CEO John Ray III and lawyers of Sullivan & Cromwell, amended the exchange’s Chapter 11 reorganization plan.
According to the amended plan, if approved, claimants’ digital assets would be valued at the time when FTX filed for bankruptcy on November 11, 2022.
However, crypto prices have risen substantially since the exchange filed for bankruptcy. At the time of filing, Bitcoin ($BTC) was valued at $17,036 but currently trades at $41,116, according to data from CoinMarketCap. FTX’s demise caused a dip in the market, which has since recovered, meaning creditors may lose millions if the plan is approved.
The Block reports one FTX creditor, Sunil Kavuri, said the plan goes against the exchange’s Terms of Services. Kavuri says the titles to digital assets belonged with customers and not with the exchange, citing Sam Bankman-Fried’s recent conviction:
“The reason SBF was convicted beyond reasonable doubt on all 7 counts was that he stole digital assets that were owned by FTX customers.”
Certain Creditors May Vote on Amendments
According to the filing, creditors belonging to certain classes will have the chance to vote on the amended plan.
In a statement, the debtors explained that these amendments may be the best possible outcome:
“…the Plan and this Disclosure Statement reflect many compromises to create the best, most equitable and economical outcome for all creditors and stakeholders in these Chapter 11 Cases.”
Continuous Setbacks and Delays
The possible amendments to FTX’s bankruptcy plan come as more bad news for the exchange’s victims. Creditors faced the reality that a potential IRS claim for $24 billion may take away from their funds. The IRS says the exchange owes it $24 billion in back taxes, and the only source of funds would see victims see no meaningful recovery. FTX objected to the IRS’s claim, calling it an “Alice in Wonderland” argument. Lawyers for the company have demanded the tax agency substantiate its claim.
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Source: https://cryptodaily.co.uk/2023/12/ftx-revises-bankruptcy-plan-crypto-claims-now-valued-at-the-time-of-bankruptcy