FTX clients have appealed to a U.S. bankruptcy judge to stop the now-defunct crypto exchange from determining the value of their cryptocurrency deposits based on 2022 prices. The clients argue that this method is preventing them from benefiting from the recent surge in crypto prices.
The Official Committee of Unsecured Creditors, in support of the Debtors’ motion to estimate claims based on digital assets, believes that collectively estimating claim values, as proposed in the motion, is the most efficient way to expedite the claim reconciliation process and the confirmation of the Chapter 11 Cases.
The Debtors’ motion states that if the court decides that cryptocurrency deposits are not property of the estate, then the cryptocurrency, which has appreciated more than $5 billion since the petition date, must be returned to customers in kind and cannot be used to pay administrative claims, among other things. According to the bankruptcy plan, FTX intends to reimburse customers in U.S. dollars, based on cryptocurrency prices at the time of FTX’s bankruptcy filing in November 2022. FTX argues that U.S. bankruptcy law requires claims to be valued using that date, but customers contend that this method undervalues cryptocurrencies, which have significantly increased since the 2022 market low.
Sunil Kavuri, an FTX creditor activist, posted about his lawyers, Moskowitz and Boies, objecting to the Debtor’s motion to estimate claims. When contacted, Kavuri clarified that the lawyers argue customers should receive “at least the value of crypto back” as property rights remain unresolved.
Alongside the Official Committee of Unsecured Creditors, FTX customers worldwide have submitted numerous similar letters to the U.S. bankruptcy court before the Thursday deadline to challenge FTX’s valuation approach. FTX hopes to have its list of cryptocurrency prices approved at a court hearing on Jan. 25 in Wilmington.
Some customers have claimed that the proposal is unfair to holders of Bitcoin and other volatile assets, alleging favoritism for stablecoin holders and external investors who purchased FTX bankruptcy claims at a lower cost. The value of three significant cryptocurrencies held by FTX customers—Bitcoin, Ether, and Solana—has significantly increased since FTX declared bankruptcy. FTX customers have also opposed the company’s decision to value its equity shares and token, FTT, at $0. Over $700 million in FTT and FTX equity held by customers would be erased under the bankruptcy plan.
In a court filing on Dec. 27, FTX stated that determining crypto prices based on the bankruptcy petition date is the only practical approach to initiating customer repayments. FTX noted that courts have allowed other bankrupt crypto firms like Celsius Network, BlockFi, and Voyager Digital to use petition-date prices to evaluate their customers’ claims.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 |
| Sentiment | negative |
| Relevance Score | 1 |
| People | Sunil Kavuri |
| Companies | Official Committee of Unsecured Creditors, Voyager Digital, Celsius Network, FTX, BlockFi |
| Currencies | Unidef, FTX, Solana, Lido Staked Ether, Bitcoin |
| Securities | None |
