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FTX's proposal to repay cryptocurrency customers at a low price faces strong opposition.

TraderKnows
TraderKnows
06-25

Recently, FTX applied to repay customers with cryptocurrency at a lower price, which has drawn significant opposition from many customers.

FTX will request on Tuesday for a judge to allow customers of its bankrupt cryptocurrency exchange to vote on a liquidation plan that will repay them in cash, a move opposed by some customers seeking higher repayments.

Since filing for bankruptcy, FTX has recovered up to $16 billion to repay customers, including more than $12 billion in cash, and has stated it will fully repay all customer claims. At Tuesday's court hearing in Wilmington, Delaware, the company will ask U.S. Bankruptcy Judge John Dorsey to approve its disclosure statement and initiate voting on the liquidation plan.

However, some FTX customers have objected to these statements, arguing that FTX will repay customer claims based on the lower cryptocurrency valuations at the time of the exchange's bankruptcy filing in November 2022.

Dorsey has already approved this method of claim valuation, but many FTX customers are discontent as they have not benefited from the recent rise in cryptocurrency prices. A customer who had one Bitcoin at the time of FTX's bankruptcy would receive approximately $16,800 in cash, while currently, one Bitcoin is worth about $60,000.

Dissatisfied FTX customers urge the court not to permit a vote on what they see as a fundamentally flawed bankruptcy plan and have filed separate lawsuits outside of bankruptcy court, seeking a ruling that FTX never owned customer deposits and must repay their full current value.

Opposing creditors argue that FTX's proposed voting forms are designed to mislead customers, "eagerly touting their so-called full recovery with interest."

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