Nikolas Sargeant
Collapsed cryptocurrency exchange FTX has made significant alterations to its bankruptcy payout plan, drastically reducing compensation for crypto holders while setting aside funds for shareholders. The revised plan, which came as a surprise to many creditors, has ignited a fierce debate within the crypto community.
Under the new arrangement, FTX crypto holders are slated to recover only 10-25% of their lost assets. Simultaneously, the exchange has earmarked $230 million from government forfeiture proceeds for shareholders, a move that has raised eyebrows given the traditional priority of creditors in bankruptcy proceedings.
FTX creditor-activist Sunil Kavuri revealed that the firm is transferring "18% of DOJ forfeiture funds" to equity holders. This decision has particularly irked creditors, as it was finalized after they had already voted on a liquidation plan and disclosed well after the voting deadline.
The revised agreement has sparked outrage among FTX customers, many of whom claim to have lost their life savings. Adding to their frustration is the fact that reimbursements will be based on crypto prices at the time of the legal petition filing, which were significantly lower than current market values.
Despite the controversy, the FTX token (FTT) has experienced a surprising 60% surge in the last 24 hours, becoming the market's biggest gainer. However, this spike has done little to quell the discontent among affected parties.
As the situation unfolds, the crypto community watches closely, with many questioning the fairness and transparency of FTX's bankruptcy proceedings.
