Recently, a US bankruptcy court approved FTX to solicit votes on a liquidation plan that involves paying customer claims in cash. This plan, which bases payments on crypto prices at the time of FTX’s collapse in November 2022, has sparked controversy among customers seeking higher amounts due to the rise in crypto prices.
Despite objections from some creditors, FTX is moving forward with the cash payment plan. Customers who held one Bitcoin with FTX in 2022 would receive $16,800 under the plan, disregarding the current value of each BTC. These customers argue that FTX is misleading them by claiming a full recovery with interest when, in reality, it falls short of that promise.
FTX CEO, John J. Ray III, defended the decision, stating that it is impossible to return the crypto customers had deposited due to the company’s financial shortfall at the time of bankruptcy. He emphasized that FTX held only a small fraction of Bitcoin and Ethereum shown in customer balances, making it challenging to fulfill all customer claims at current market prices.
Customers have until August 16th to vote on the liquidation plan, with final approval scheduled for October 7th. While FTX aims to provide most customers with access to their owed amount within 60 days of approval, those with claims under $50,000 may receive payments even sooner.
Reports suggest that FTX has $11.4 billion in assets, a figure that could potentially increase to $12.6 billion by the end of October. Despite these substantial assets, FTX faces challenges in meeting all customer claims, especially with the discrepancy between the cash payment plan and current crypto prices.
FTX’s approval to proceed with a cash payment plan for customer claims has generated mixed reactions from customers and creditors. While the company aims to provide timely payments to most customers, the disparity between the plan’s payout and current crypto prices raises concerns about transparency and fairness in the bankruptcy process. As FTX navigates the approval process and addresses customer objections, it will be crucial for the company to uphold its commitment to fulfilling customer claims to the best of its ability.