FTX creditors stand to collectively lose millions under new reorganization plan

cyptouser11 months agoCryptocurrencies News154

FTX Debtors filed an amended Chapter 11 reorganization plan on Dec. 16 that will potentially lead to millions of dollars worth of losses for the defunct crypto exchange’s creditors. The plan proposes valuing the creditors’ claims at crypto prices on Nov. 11, 2022, the day FTX filed its bankruptcy petition.

In the days leading up to the FTX collapse, the crypto market went into a downward spiral. The exchange’s bankruptcy filing triggered a bear market that lasted several months into 2023.

Therefore, on Nov. 11 last year—the bankruptcy petition date—major cryptocurrency prices were significantly lower than at the time of writing. This difference in the crypto prices means creditors will be left with sizable potential losses when compared to the value of their assets as per current market prices.

For instance, Bitcoin’s (BTC) price was just above $17,500 on Nov. 11, 2022, according to CryptoSlate data. Over the past year, however, Bitcoin price has more than doubled to $41,649.57 at the time of writing, CryptoSlate data shows. This indicates that FTX creditors will incur a loss of over $24,000 per BTC.

Similarly, Ethereum’s (ETH) price has grown from around $1,284 on Nov. 11 to $2,214 at the time of writing, CryptoSlate data indicates. For the defunct exchange’s creditors, that means a loss of nearly $1,000 per ETH. 

Sunil Kavuri, an FTX creditor, noted in a post on X that the new reorganization plan ignores FTX’s Terms of Service, which “states Digital Assets are the property of Users and not FTX Trading.”

Certain classes of creditors will have the opportunity to vote on the plan before it is finalized.

The content on this website comes from the Internet. Due to the inconvenience of proofreading the authenticity and accuracy of the copyright or content of some content, it may be temporarily impossible to confirm the authenticity and accuracy of the copyright or content. For copyright issues or other issues caused by this, please Call or email this site. It will be deleted or changed immediately after verification.

related articles

Unifying the blockchain babel with universal connector

In the decentralized finance (DeFi) space, each blockchain or protocol can be compared to a unique s...

Binance CEO: Crypto industry has shifted from ‘early adopters’ to ‘early majority’

55966e89˃Binance CEO Richard Teng recently told Cointelegraph that the cryptocurrency industry has t...

Financial watchdog clarifies role amid South Korea's new crypto compliance crackdown

South Korea’s Financial Supervisory Service (FSS) has clarified its role regarding the rumored remov...

Chainlink CCIP revenue surges 180% over 2 months amid ‘massive adoption’

Chainlink CCIP revenue surges 180% over 2 months amid ‘massive adoption’

25cc9d4a˃Revenue for Chainlink’s Cross Chain Interoperability Protocol (CCIP) has surged 180% over t...

Grayscale files updated Bitcoin ETF prospectus days after talks with U.S. SEC

Grayscale submitted an updated filing for its pending spot Bitcoin ETF to the U.S. Securities and Ex...

SEC pushes Hashdex, ARK 21Shares Ether ETFs as approval hope dwindles

SEC pushes Hashdex, ARK 21Shares Ether ETFs as approval hope dwindles

25cc9d4a˃The United States Securities and Exchange Commission postponed its decision on Hashdex and...