The Updated Restructuring Plan for FTX Evaluates Cryptocurrency Claims at the Time of Bankruptcy

Published on:

Last Updated on December 18, 2023 by Bitfinsider

The FTX Debtors estate, led by CEO John Ray III and Sullivan & Cromwell lawyers, submitted a modified Chapter 11 plan of reorganization today, outlining how bankruptcy claims will be handled in the case.

Notably, the proposal includes a provision that would value claimants’ digital assets in cash at the time of the bankruptcy filing on November 11, 2022.

The demise of FTX triggered a significant drop in the market, which has since recovered well, with the global crypto market value climbing from around $856 billion to 1.6 trillion today. In that time, FTX’s own token has roughly doubled. That implies creditors could lose out on millions of dollars in potential gains if the scheme is approved.

Sunil Kavuri, an outspoken FTX creditor, claims the reorganization proposal violates FTX’s Terms of Service, which specify that digital asset titles belong to customers, not the exchange. “The reason SBF was convicted beyond reasonable doubt on all 7 counts was that he stole digital assets that were owned by FTX customers,” Kavuri said in a statement.

According to the plan, some classes of creditors will be able to vote on the updated restructuring plan. The Debtors underline their efforts to reach to this position in a statement, stating, “the Plan and this Disclosure Statement reflect many compromises to create the best, most equitable, and economical outcome for all creditors and stakeholders in these Chapter 11 Cases.”

For the plan to go into force, several approval thresholds in terms of both money amount and claimant number will be required. However, under certain conditions known as a “cram-down,” classes of creditors who did not agree to the plan can nonetheless be required to accept it if the solution is “fair and equitable,” according to the Debtors’ statement.

Hardware wallets are safe and secure devices that can be used offline. They keep your cryptocurrency offline, making it impossible for you to be hacked. To find out more on the leading hardware wallets, you may view our reviews here: Ledger & Trezor
Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.