Bankrupt cryptocurrency exchange FTX made a historic step when it revealed in a recent document that it would reimburse all its debtors and consumers plus interest. Although this development was well received by many in the cryptocurrency industry, FTX creditors could be more pleased.
Representative for FTX Creditors Denies Compensation Plan
Sunil Kavuri, the spokesperson for FTX creditors, was against the suggested pay scheme. At the point of bankruptcy, he argued that obligations should be settled in cryptocurrencies rather than their dollar equivalent.
Sunil, a significant player in the unfolding FTX story, recently asked stakeholders to vote against the proposed proposal. Sunil’s position draws attention to several important issues with the existing state of affairs:
- Cromwell and Sullivan S&C/Debtors are indebted to FTX customers for the current value of their holdings, which stands at 3 to 10 times the petition prices.
- S&C is accused of causing FTX creditors significant harm, estimated to be more than $10 billion.
- The FTX creator, SBF, was sentenced to 25 years for allegedly taking user deposits and breaking the terms of service (TOS).
- S&C faces allegations of assisting and abetting SBF’s fraudulent acts related to pending class-action litigation.
Sunil underlined that each defendant ought to be held liable for the losses suffered by FTX clients in an amount equal to the holdings’ current market value.
Gaining from the Upsurge in the Crypto Market
FTX declared bankruptcy in November 2022, when the crypto winter peaked. But in 2023, both the cryptocurrency market and the exchange’s holdings of cryptocurrencies saw a significant resurgence.
FTX announced plans to utilize its surplus billions to compensate its two million customers, a departure from typical bankruptcy outcomes. Unlike conventional settlements where creditors often receive minimal funds, the exchange aims to distribute around $16.3 billion after asset liquidation. Of this sum, $11 billion is owed to non-governmental creditors and customers, as per the company’s statement.
