FTX lenders want ‘in-kind’ crypto payments instead of 2022 minimum rates
A number of FTX's customers have petitioned a US bankruptcy judge. They argue that FTX's approach is hindering them from capturing the recent surge in crypto prices.
In support of the debtor's request to estimate claims based on digital assets, the Official Committee of Unsecured Creditors believes that a joint assessment of claim values as proposed in the motion is the most effective way to streamline the claims reconciliation process and accelerate Chapter 11. Confirmation.
The Debtors' Petition states:
“If the court decides that cryptocurrency deposits are not property, then such cryptocurrency (valued at more than $5 billion as of the date of the petition) must be returned to customers in kind and must not be used to pay administrative fees, among other things. I understand.”
According to the bankruptcy plan, FTX plans to refund customers in dollars, depending on cryptocurrency prices at the time of FTX's bankruptcy filing in November 2022. Cryptocurrencies that have risen sharply since 2022 market lows.
Sunil Kavuri, an attorney for the FTX lender, disputed the borrower's objection to X (formerly Twitter)'s claims about attorneys Moskowitz & Boyce. Cointelegraph contacted Kavuri to clarify if lawyers are arguing for clients to be paid in kind with cryptocurrency. Kavuri argues that the lawyers should accept “at least the value of the crypto back” as long as the property rights are not resolved.
In addition to the Official Committee of Unsecured Creditors, FTX's customers filed several similar letters with the U.S. Bankruptcy Court ahead of Thursday's deadline to challenge FTX's assessment approach. FTX aims to have its cryptocurrency listing approved at a January 25th court hearing in Wilmington, Delaware.
Related: Banking app dev to buy back $100M stake in FTX
Some customers claim that FTX's bankruptcy claims are unfair to Bitcoin (BTC) and other volatile assets, citing preferential treatment for stablecoin holders and foreign investors.
Moskowitz & Boyce, the attorneys representing the FTX creditors in the MDL, filed an objection to presumptive claims in the debtors' petition.
Fight for FTX creditors to maximize recovery for FTX creditors
We may initiate pending adversary proceedings for property rights pic.twitter.com/kBx8KWyScU
— Sunil (@sunil_trades) January 12, 2024
After FTX declared bankruptcy, the value of three major cryptocurrencies held by FTX clients – Bitcoin, Ether (ETH) and Solana (SOL) – increased significantly. FTX customers also protested the company's decision to price its equity shares and token FTT at $0. More than $700 million in FTT and FTX equity held by customers will be wiped out under the bankruptcy plan.
In a court filing dated December 27, 2023, FTX said that determining crypto prices based on the bankruptcy filing date is the only practical approach to begin paying customers.
FTX noted that courts have allowed other bankrupt crypto firms, such as Celsius Network, Blockchain, and Voyager Digital, to use petition date values to evaluate their clients' claims.
Magazine: Deposit Risk: What do crypto exchanges do with your money?
