FTX, the now-bankrupt cryptocurrency exchange, has come under fire following its recent court filing on December 27.
The document reveals a contentious repayment plan that has sparked a significant backlash from the crypto community and FTX customers.
FTX’s Controversial Estimation Motion
On December 27, the bankrupt former behemoth disclosed a repayment plan, assigning a lower-than-market value to customer digital assets based on their worth at the time of the exchange’s collapse last year.
FTX have submitted an Estimation Motion that dollarizes customer claims per Nov 11 2022.
BTC: $16,871.63
ETH: $1,258.84
SOL: $16.2471144The rest of the assets would go to non-customer creditors including shareholders. If customers disagree, they must object until January 11. pic.twitter.com/86iPuL4qNT
— FTX 2.0 Customer Coalition (@ftxcoalition) December 27, 2023
This plan emerged following FTX’s announcement of its intention to compensate customers with the value of their holdings as of its bankruptcy date.
Specifically, the company suggested appraising cryptocurrency assets at the market rates prevailing on November 11, 2022.
This approach has received backlash as it results in customers receiving amounts below the current market values of their assets.
According to the proposal, Bitcoin is valued at $16,871.63, Ethereum at $1,258.84, and Solana at $16.2471144. Stablecoins such as USDT, TUSD, and BUSD have also been marked slightly below their typical $1 value.
The valuation excludes FTX Token (FTT) but includes digital assets like leveraged tokens and tokenized stocks. The remaining assets are set for distribution to non-customer creditors, including shareholders.
The document also outlines that adjustments to the valuation were made to consider various elements, including the systematic disposal of assets, assets that are not easily tradable, and assets resembling equity.
Customer Dissatisfaction and Legal Challenges
The proposed valuation has been met with immediate backlash from FTX’s customers and creditors, who argue that the values significantly undervalue their digital assets.
Sunil Kavuri, a notable creditor, and the FTX 2.0 Coalition, representing a group of affected customers, are actively urging stakeholders to contest the valuation.
The discrepancy between the proposed and market values on FTX’s collapse date has led to concerns among customers who fear missing out on potential gains due to the undervalued repayment plan.
Many are also seeking guidance on how to file objections or reject the FTX repayment plan. Customers who disagree with the proposed valuation have a deadline of January 11 to file their objections.
This window presents an opportunity for those who wish to contest the exchange’s estimates. The FTX 2.0 Coalition has advised that no legal representation is required to express objections to the court.
The post SOL for $16? FTX Faces Backlash Over Valuation of Customer Claims in Repayment Plan appeared first on CryptoPotato.
