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The FTX Debtors estate has filed an amended Chapter 11 to its reorganization plan today, leaving investors its creditors dumbfounded on the defunct exchange’s next steps. According to the proposed plan, under the leadership of CEO John Ray III and the legal team from Sullivan &amp; Cromwell, the estate is looking to value crypto claims at the time the company filed for bankruptcy last year, not current market values.&nbsp;
<h2 id="b-ftx-debtors-reorganization-plan-b">FTX Debtors’ Reorganization Plan</h2>
FTX’s collapse in November 2022 sent ripples across the crypto industry that are still being felt today, one year later. The collapse led to a further cascade in already struggling crypto prices, leading to some wondering if that’s what might be the end of a flourishing crypto industry.&nbsp;
At the time of the FTX bankruptcy, Bitcoin was valued at approximately $17,000, less than a quarter of its all-time high of $69,000. Since then, however, the cryptocurrency industry has made significant progress toward recovery, with Bitcoin currently trading at $42,000.
According to <a href="https://t.co/n6mmp8UOX5" target="_blank" rel="noopener noreferrer nofollow">the new filing</a> made in the United States Bankruptcy Court for the District of Delaware, FTX’s debtor estate asked that the value of any customer entitlement claim against the exchange be at the value of accounts and assets when the crypto exchange collapsed. If approved, this would mean the crypto assets would be converted to cash and then paid to creditors.
<blockquote class="twitter-tweet">
 FTX Debtors have filed the reorg. Plan
 Most importantly they have ignored FTX TOS that states Digital Assets are the property of Users and not FTX Trading
 The plan says that Digital Assets are valued at Petition Date conversion rates (prices) <a href="https://t.co/WTj07nlOP5" target="_blank" rel="noopener noreferrer nofollow">pic.twitter.com/WTj07nlOP5</a>
 — Sunil (FTX Creditor Champion) (@sunil_trades) <a href="https://twitter.com/sunil_trades/status/1736128401772105761?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">December 16, 2023</a>
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As expected, the plan has sparked controversy, particularly among FTX creditors. Creditors argue their claims should be based on the asset’s values to make them whole. <a href="https://x.com/sunil_trades/status/1736300454143775148?s=20" target="_blank" rel="noopener noreferrer nofollow">According to Sunil Kavuri</a>, an outspoken FTX creditor, this goes against FTX’s Terms of Service, “which stated that the titles to digital assets belonged with customers and not the exchange.”
<blockquote class="twitter-tweet">
 FTX’s plan values crypto claims at petition prices
 The reorganization plan goes against FTX’s Terms of Service, which stated that the titles to digital assets belonged with customers and not the exchange
 Debtors say “The Plan aims to create the best economical outcome for all… <a href="https://t.co/cgj77gcHrG" target="_blank" rel="noopener noreferrer nofollow">pic.twitter.com/cgj77gcHrG</a>
 — Sunil (FTX Creditor Champion) (@sunil_trades) <a href="https://twitter.com/sunil_trades/status/1736300454143775148?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">December 17, 2023</a>
</blockquote>
<h2 id="b-uncertainty-around-ftx-s-ability-to-repay-users-in-full-b">Uncertainty Around FTX’s Ability To Repay Users In Full</h2>
FTX owed its customers and creditors more than $8.7 billion when it filed for bankruptcy.<a href="https://bitcoinist.com/ftx-court-gives-green-light-3-4-billion-liquidation/#:~:text=In%20a%20significant%20development%20for,staking%2C%20and%20hedging%20its%20holdings." target="_blank" rel="noopener noreferrer nofollow"> A US judge has given</a> the bankrupt exchange permission to liquidate its cryptocurrency holdings worth over $3.4 billion. <a href="https://bitcoinist.com/ftx-cleared-to-sell-873m-in-assets-to-settle-debts/" target="_blank" rel="noopener noreferrer nofollow">Another order in November</a> gave the exchange permission to sell its assets in crypto trusts worth $873 million.&nbsp;
FTX’s estate has also gone through <a href="https://www.newsbtc.com/ftx/ftx-exchange-employees/" target="_blank" rel="noopener noreferrer nofollow">different efforts to claw back funds</a> to pay its creditors and users. However, the company is yet to provide a definitive timeline for repaying users in full, with many even wondering if they’ll be paid their crypto assets in full.
FTX <a href="https://bitcoinist.com/celsius-and-ftx-deposit-ethereum-on-exchanges/" target="_blank" rel="noopener noreferrer nofollow">recently transferred</a> 1,593 ETH, valued at $3.66 million to a private wallet which on-chain tracker Spotonchain has linked to Coinbase. On the other hand, former CEO Sam Bankman-Fried is still in jail pending his sentencing which is scheduled to take place in March, 2024.
Featured image from iStock

FTX Restructuring Plan Leaves Creditors And Users Dumbfounded – Here’s Why

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