- FTX creditors will receive only 10-25% of funds in revised repayment plans
- $230 million from seized assets are allocated to FTX shareholders
- FTX creditors express outrage, accusing the exchange of betrayal
The cryptocurrency exchange FTX, which collapsed in 2022, made last-minute changes to its payment plans, allocating only 10-25% of the funds for reimbursements to FTX cryptocurrency holders.
FTX Creditors Are Not Happy
Additionally, FTX has set aside $230 million in proceeds from government forfeiture actions to benefit shareholders. According to Sunil Kavuri, an FTX creditor activist, the company is transferring “18% of DOJ forfeiture funds” to FTX shareholders.
The revision of the reimbursements came as a surprise to creditors, who were unaware of the provision. The agreement was apparently finalized after creditors voted on a liquidation plan and was revealed 30 days after the deadline.
Traditionally, in a Chapter 11 bankruptcy process, shareholders are repaid last, after creditors.
However, the document states: “Both the debtors and the preferred shareholders have an interest in avoiding the costs, expenses, and delays that would be associated with disputes regarding the Plan and forfeiture proceeds.”
In the revised agreement, “extra money is being transferred to shareholders,” Sunil explained in a social media X chat. He also added that creditors will receive reimbursements based on the petition date, when cryptocurrency prices were lower than they are today.
For example, when the Chapter 11 filing was made, Bitcoin was trading at $16,000. However, at the time of writing, the main cryptocurrency is trading at $63,356, which is sparking protests from FTX creditors.
FTX Cryptocurrency Holders Are Not Backing Down
Sunil further emphasized that the new revised document has had a devastating impact on creditors, as their lifetime savings were stolen, and the property is not being returned. This is causing many FTX customers to suffer from mental distress and panic attacks.
FTX creditors have taken to social media to criticize the latest agreement and express their dissatisfaction. One user wrote: “It’s disgusting that they inserted these changes into the plan so late, after the vote.” Another creditor commented that FTX has scammed cryptocurrency holders “twice.”
Conclusion
In short, FTX creditors feel betrayed by the recent changes to the reimbursements, which favor shareholders and leave cryptocurrency holders with only a fraction of their funds.
The frustration is palpable, and many are wondering how such a situation could arise. We are waiting to see if there will be any further developments or changes to the plan.
