A US bankruptcy court has given FTX the green light to seek votes on a liquidation plan that would pay customer claims in cash. This plan, approved despite objections from customers seeking higher payments due to the rise in crypto prices, would base payouts on prices at the time of FTX’s collapse in November 2022.
FTX CEO John J. Ray III defended the plan, stating that it is impossible to return the crypto that customers had deposited, as the company faced a shortfall at the time of bankruptcy. Ray emphasized that FTX cannot give back tokens it never possessed, highlighting the limitations of the situation.
Creditors raised concerns over the discrepancy between the proposed payouts and the current value of cryptocurrencies. Some creditors objected to FTX’s portrayal of a full recovery with interest, arguing that customers should be aware that this recovery may not actually reflect the full extent of their losses.
According to estimates, customers who held one Bitcoin with FTX in 2022 would receive $16,800 under the plan, rather than the current value of each BTC. The deadline for voting on the plan is set for August 16, with the final approval scheduled for October 7. Customers face the dilemma of accepting the proposed payouts or pushing for higher amounts, potentially impacting their fellow customers.
Despite the controversy surrounding the liquidation plan, separate reports suggest that FTX holds assets amounting to $11.4 billion. By the end of October, the company could potentially increase its assets to $12.6 billion, indicating a significant financial standing even amidst the bankruptcy proceedings.
The approval of FTX’s cash payment plan has sparked debate among customers and creditors, highlighting the complexities and challenges of resolving a bankruptcy case involving cryptocurrencies. While FTX strives to provide a fair resolution for all parties involved, the inherent limitations and discrepancies in asset distribution underscore the need for transparency and careful consideration in such cases.