FTX creditor say Payout deal is an insult
The case of the FTX exchange is pending under a high-value creditors’ liability settlement plan and appeal to the bankruptcy attorney in the estate
That may be a diminished consolation for investors who were trading cryptocurrency on the exchange when it collapsed. When FTX filed for protection, the price was going to be $16,080. The economy recovered and the asset at FTX were untangled over the past two years. A single bitcoin on Tuesday was selling for close to $62,675. If accrued interest is taken into account, the loss comes out to 290%, which is a little less than it would be if investors had kept their coins.
They take issue with the way claims have been valued under the plan. Many customers who held altcoins like bitcoins on the FTX platform didn’t have their claims assigned a dollar value based on the price of those assets on the petition, instead their claims were assigned a dollar value based on the date of the petition. The issue is the subject of a lawsuit filed by the creditors within the bankruptcy proceeding.
John Ray III, the veteran bankruptcy attorney in charge of the estate, stated that they are in a position to propose a plan that would return 100 percent of the amount of claims plus interest. I want to thank all the customers for their patience as we go through this process.
The FTX exchange briefly explored acquisition by the rival exchange. Its founder and former CEO Changpeng Zhao, was sentenced last week to four months in prison for looking the other way as criminals used the platform to move money connected to child sex abuse, drug trafficking and terrorism.
The Internal Revenue Service will receive a $200 million upfront payment as part of the settlement in the proposed plan to suspend high value claims against FTX.
FTX said in a court filing late Tuesday that it owes about $11.2 billion to its creditors. The exchange expects to distribute between $14.3 billion and $16.3 billion to them.
The filing said that supplemental interest payments are included in the plan if funds remain. Most people have 9% interest for their debts.
John Ray, FTX.com, is Reviving the Collision After Enron Collapse: A Murder by John Ray III
FTX said that it was able to recover funds by monetizing a collection of assets that mostly consisted of proprietary investments held by the Alameda or FTX Ventures businesses, or litigation claims.
Bankman-Fried was convicted in November of fraud and conspiracy — a dramatic fall from a crest of success that included a Super Bowl advertisement, testimony before Congress and celebrity endorsements from stars like quarterback Tom Brady, basketball point guard Stephen Curry and comedian Larry David.
John Ray III is a long-time bankruptcy litigator who is best known for helping to clean up the mess that was made after the collapse of Enron.
Ray stated in a prepared statement that “we are excited to be in a position to propose a chapter 11 plan that contemplates the return of 100% of the claim amounts plus interest.”
It is not clear if FTX will continue as a company or not. In early 2023, Ray said that he had formed a task force to explore reviving FTX.com, the crypto exchange.
The sordid details of a company run amuck that emerged after its assets were seized would hamstring almost any business attempting a comeback, but there may also be different parameters for cryptocurrency exchanges.
