FTX creditors just got hit with a brutal update. According to fresh bankruptcy docs shared by creditor-activist Sunil Kavuri, creditors will only recover between 10-25% of their lost crypto. And here’s the kicker — they’ll get reimbursed based on the petition date when Bitcoin was worth a measly $16,000, far lower than today’s market.
But why such low numbers? The decision to use petition date prices has been causing uproar across the creditor community. As Kavuri explained, “Crypto holders are not whole at petition date prices,” confirming what many creditors feared. People had their life savings locked up in FTX, and now they’re getting reimbursed at pre-rally prices. Naturally, the community is livid.
Panic Among FTX Creditors and Allegations of Betrayal
The creditor base isn’t taking this lightly. Mental distress, divorces, and even suicidal thoughts have reportedly spread across the ranks of FTX customers, who feel robbed by the legal system. One creditor claimed it’s “disgusting they sneak this into the plan so late, after the vote.” Another asked, “I can’t understand why the law can’t protect us investors,” labeling the collapse as a massive scam. One creditor just put it bluntly: “Disgraceful, we have been scammed twice!”
Kavuri also weighed in on the issue, pointing fingers directly at Sam Bankman-Fried, the once-crypto poster boy turned convicted fraudster. According to Kavuri, Bankman-Fried violated FTX’s terms of service by funneling client funds into other ventures, including paying off debts and snapping up $600 million worth of Robinhood shares. FTX’s bankruptcy estate recently locked down a deal to reclaim those shares, hoping to soften the blow for creditors. But is that enough?
FTX’s Reorganization Plan Faces Heavy Pushback
Kavuri and his camp aren’t the only ones sounding alarms. The FTX reorganization plan has drawn fire from all directions, including a U.S.-based trustee, Andrew Vara. Vara slammed the plan, arguing that it hands out way too much legal immunity to administrators. His legal filing noted that such immunity “far exceeds” the norm, painting it as an outlier in the crypto space. And the Securities and Exchange Commission (SEC) might also get in on the act, hinting they’ll object if FTX opts to pay out creditors using stablecoins.
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