Victims of the bankrupt cryptocurrency exchange FTX submitted documents to the Southern District of New York Court on the 14th, claiming that the frozen assets of FTX (about $8 billion) belong to their customers, not bankruptcy assets, and requested a ruling from the court.
Since its closure in November 2022, the restructuring team of the bankrupt cryptocurrency exchange FTX has been actively raising funds to repay creditors. According to the latest repayment plan released by the restructuring team last month, the estimated amount owed is $11.2 billion, but after selling assets, they will have approximately $14.5 billion to $16.3 billion in cash available for compensation. Therefore, the vast majority of users (those who previously held funds of $50,000 or less) can receive approximately 118% cash compensation.
However, it is important to clarify that the compensation for losses is calculated based on the platform funds of FTX on the day of the Chapter 11 bankruptcy, so unless the assets held by users at FTX are stablecoins, in reality, they are still significant losses (BTC was only $17,000 at the time)…
Victims Seek Asset Ownership Ruling
Against this backdrop, victims of FTX submitted documents to the Southern District of New York Court on the 14th, claiming that the frozen assets of FTX (about $8 billion) belong to their customers, not bankruptcy assets, and requested a ruling from the court. The documents show that FTX filed for bankruptcy during the cryptocurrency bear market, when cryptocurrency prices plummeted, making it extremely unfair to evaluate the value of customer claims at that time price.
Lawyers Adam Moskowitz and David Boies representing FTX victims stated in the submitted documents that many people see the bankruptcy process as a second theft:
The documents also add that the bankruptcy law prioritizes certain creditors, placing FTX’s FTT token holders at the very end of the compensation order.
According to reports from foreign media, lawyer Adam Moskowitz, representing FTX victims, stated in an interview:
Creditors Oppose Bankruptcy Reorganization Plan
On the other hand, according to previous reports, Sunil Kavuri, a representative of the FTX creditors’ group, stated on the community platform X on the 6th that the FTX Creditors’ Advisory and Holders Committee (CAHC) opposes FTX’s bankruptcy reorganization plan for various reasons:
Repaying in cash will trigger taxable events, resulting in unnecessary costs for creditors, and they suggest repaying assets in kind as an alternative.
Creditors invoke Chapter 11 of the Bankruptcy Code to oppose releasing funds to debtors (FTX bankruptcy reorganization team), claiming they are attempting to distribute stolen assets.
Does not serve the best interests of the creditors.
Additionally, Kavuri mentioned other arguments against, including the need to update disclosure statements to the Internal Revenue Service (IRS), undisclosed litigation proceedings, inconsistencies in the debtor’s liquidation analysis, and objections to the timing schedule.