Former FTX Customers Demand Fair Repayment Amid Market Surge

Key Points:

• Former FTX customers contest repayment terms, claiming exclusion from the crypto market’s recent rise.
• Over 80 customers oppose receiving payment in US dollars, seeking a return of their trapped crypto assets instead.

According to Bloomberg, former FTX customers are urging a US judge to reconsider the repayment plan, asserting that the proposed rules unjustly exclude them from the year-long surge in Bitcoin and other digital currencies.

Former FTX Customers Challenge Repayment Terms Amid Crypto Boom

Over 80 customers have contested a plan to link their digital assets’ value to FTX’s bankruptcy filing date, November 11, 2022, proposing payment in US dollars instead of returning the crypto coins.

These former FTX customers, who had crypto assets trapped when FTX’s founder, Sam Bankman-Fried, resigned amid fraud allegations, argue that the current plan is inequitable. Bankman-Fried was later convicted of orchestrating a massive fraud leading to FTX’s collapse.

The bankruptcy experts, led by Chief Restructuring Officer John J. Ray III, are working to recover cash and crypto assets for former FTX customers. The court has approved the sale of crypto assets, aiming to create a multi-billion-dollar pool for customer reimbursement. Claims will be based on the crypto coin’s price on FTX when it filed Chapter 11; Bitcoin holders, for instance, are estimated to be owed $16,871 per coin.

FTX seeks to sell 35 properties, including The Orchid in Albany (Bahamas), where Bankman-Fried and the board resided. Other properties include GoldWynn, Bayside Executive Park, Pineapple House, and multiple Veridian Corporate Center apartments.

FTX presented a compensation plan in October 2023, projecting a 90% asset return by Q2/2024 if court-approved. The court has allowed FTX to sell $3.4 billion in crypto assets since September and liquidate hundreds of millions in crypto fund shares. As of December 16, FTX has transferred over $600 million in cryptocurrencies to the exchange in the past three months.