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FTX News: Creditors Express Discontent Over Minimum 10-25% Crypto Payouts

source-logo  crypto-news-flash.com 30 September 2024 05:13, UTC
  • FTX creditors are discontented with receiving only 10-25% of their holdings, as repayments are based on lower bankruptcy filing prices.
  • Despite settlement efforts, many creditors feel the compensation falls short of covering their significant financial losses.

Following the recent development regarding FTX’s plan to redistribute $16B to creditors in Q4 2024, CNF highlighted how the crypto market awaits a liquidity surge. Currently, FTX is preparing to distribute $16 billion to its creditors, but many are unhappy with the payout terms, citing losses far greater than what they will receive.

Furthermore, the collapse of the exchange has left creditors feeling shortchanged, as the repayment will be between 10% and 25% of their holdings.

Reiterating our earlier discussion, where the $14.5 billion payout could ignite a crypto market surge, research suggests, BitGo CEO Mike Belshe stated that this falls short of adequate compensation.

0% of FTX creditors agree that receiving $16,800 for your Bitcoin is fully compensated. I understand why the bankruptcy process needs to work this way, but let’s not pretend victims are getting their money back or that FTX wasn’t as awful as it was.

Repayments Based on Petition Date Prices

A key issue is that repayments will be calculated based on the cryptocurrency prices at the time of FTX’s bankruptcy filing, when Bitcoin (BTC) was valued at around $16,000—significantly lower than its current price of approximately $65,000.

This has been the cause of anger among creditors, who argue that this method does not fully account for their losses, many of which involve life savings. Some creditors have reported experiencing mental distress due to the financial hit.

One FTX creditor, Sunil Kavuri, voiced frustration on his X social media, with other investors joining in to express their dissatisfaction with the process. The U.S. Securities and Exchange Commission (SEC) has also highlighted potential objections, particularly if stablecoins are used for repayments.

It’s disgusting they sneak this into the plan so late, after the vote.

— Historian on the FTX Scam (@historian_ftx) September 28, 2024

FTX and Emergent Technologies, co-founded by FTX’s Sam Bankman-Fried, recently reached an agreement to liquidate $600 million worth of Robinhood shares to help make creditors whole.

Furthermore, according to a September 6 motion from FTX CEO John Ray III, this deal could expedite creditor repayments and save on legal costs. Ray emphasized that the reorganization plan resulted from fair negotiations and aims to maximize value for the creditors without collusion.

Despite these efforts, the repayment plan has left many creditors feeling that justice is still out of reach. On the other hand, Bitcoin (BTC) is currently trading at $64,457.24, with a decrease of 1.97% in the past day and a 0.12% surge in the past week.

crypto-news-flash.com