FTX, a prominent cryptocurrency exchange, recently received approval from a US bankruptcy court to proceed with a liquidation plan that involves settling customer claims in cash. This decision has sparked controversy among customers who are dissatisfied with the proposed payment amounts based on crypto prices at the time of FTX’s collapse in November 2022.
Despite objections from some creditors who argue that the cash payment plan falls short of the potential gains due to the increase in crypto prices since FTX’s collapse, the exchange is moving forward with the proposal. Customers who held one Bitcoin in their FTX accounts in 2022 would reportedly receive $16,800 under the plan, significantly less than the current value of Bitcoin.
FTX’s CEO, John J. Ray III, defended the exchange’s position by stating that it is impossible to return the exact amount of crypto that customers had deposited due to the company’s financial constraints at the time of bankruptcy. Ray emphasized that attempting to provide customers with the appreciated value of their assets would come at the expense of other creditors.
Reports suggest that FTX has $11.4 billion in assets, with the potential to increase to $12.6 billion by the end of October. Despite the controversy surrounding the liquidation plan, FTX aims to expedite the payment process by providing faster options for customers with claims under $50,000. The exchange anticipates that 98% of customers will receive their owed amounts within 60 days of the bankruptcy court’s approval.
While FTX’s liquidation plan may not satisfy all customers, the exchange is implementing measures to address creditor concerns and facilitate timely payments. The ongoing debate over the valuation of customer claims highlights the complexities involved in settling accounts following a company’s collapse. As the situation unfolds, stakeholders will closely monitor FTX’s compliance with the approved plan and assess the impact on affected customers and creditors.
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