The latest plan of FTX might allow creditors to recover up to $16.3 billion, but some critics say the proposal still doesn’t meet the standards of fairness.
The bankrupt crypto exchange stated on May 7, explaining that the plan to reimburse victims from its 2022 collapse would cover all creditor claims and add “billions in compensation for the time value of their investments.”
However, critics contend that the proposal still falls short of adequate compensation.
Popular Bitcoin developer, Luke Dash is also critical of the development. According to him
“…Same for mtgox even though the courts are pretending we’re getting everything back now.”
However, the plan remains subject to finalization and approval by the United States Bankruptcy Court for the District of Delaware.
Under this plan, only creditors with claims of $50,000 or less will be eligible for a 118% recovery, a group that FTX estimates makes up “98% of the creditors of FTX by number.”
The plan continues to compensate creditors based on the value of their assets at the time of the bankruptcy in November 2022, not at current prices, a change some creditors have been requesting.
Since then, the crypto markets have rebounded, with Bitcoin surging by almost 280%.
“We are pleased to be in a position to propose a Chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors,” said FTX CEO and chief restructuring officer John J. Ray III.
FTX has estimated that the total value to be distributed to creditors will range between $14.5 billion and $16.3 billion. The proposed repayment would occur within 60 days after the plan’s effective date.
Some industry observers have criticized the proposal, pointing out that creditors won’t get their stolen funds back in amounts that align with current market prices.
“I understand why the bankruptcy process needs to work this way but let’s not pretend victims are getting their money back,” Mike Belshe, the CEO of BitGo, posted to X on May 8.
@BTCVIX on X said, “It is always this angle when it works in the favor of the creditor but the exact opposite when it doesn’t– and there are plenty of tokens that people held that are down 90% from the snapshot. SRM is probably one of them off of the top of my head.”
FTX, a $32 billion cryptocurrency exchange, went bankrupt in November 2022, uncovering an $8 billion gap that its new management has been trying to close in the years since.
To fill this gap, FTX has undertaken several efforts, including an $884 million sale of shares in the artificial intelligence company Anthropic in March, representing most of FTX’s stake in the firm.
FTX stated in January that its restructuring plans do not involve reviving the cryptocurrency exchange, which was one of the top platforms by trading volume before it collapsed.
