FTX Creditors to Recover Only 10-25% of Cryptocurrency
According to new bankruptcy filings, FTX creditors will recover only 10–25% of their cryptocurrency, FTX creditor Sunil Kavuri says. The move has sparked uproar across those whose funds were caught in the implosion of the crypto exchange, with reimbursements using the prices at which the cryptocurrencies were valued on the date the legal petition was filed.
Prices at Petition Date Cause Outrage
The decision by FTX to reimburse its creditors based on the value of cryptocurrency on the date of the petition has indeed left many creditors with the feeling that they have been shortchanged. At the time the petition was filed, Bitcoin was trading at around US$16,000, a far cry from today’s prices. Many creditors, including Kavuri, claim that these lower reimbursement rates fail to return the full value of their assets.
Emotional and Financial Impact to Creditors
Kavuri has been an outspoken creditor-activist in the case, citing emotional and financial stress facing many them customers. The losses have ranged from a spate of panic attacks to divorces and suicidal thoughts as people try to come to terms with lost life savings. Other FTX creditors similarly expressed frustration over what they feel has been a lack of protection for investors.
Legal Concerns Over FTX Reorganization Plan
Kavuri also accused the former CEO of them, Sam Bankman-Fried, of violating the service’s rules by paying the debts with the clients’ money. He referred to the company agreement to secure $600 million in Robinhood shares for creditors, which many claim is far from sufficient to cover the damage caused.
Opposition to the Reorganization Plan Grows
Kavuri isn’t the only one to voice concerns. This past August 2024, for instance, a U.S. trustee involved in the FTX bankruptcy process tore into the reorganization plan for giving estate administrators too much legal cover. The SEC has voiced complaints too, suggesting it could object if creditors get reimbursed in stablecoins rather than their original assets.
FTX’s reorganization is continued to be tormented by increasing legal and ethical challenges, frustrating creditors and further creating uncertainty as to the future of their funds.
