FTX creditors have expressed anger following last-minute changes to the payment schedule, with many feeling they have been underpaid for a second time.
FTX Creditors Will Gain Wealth During Cryptocurrency Prices’ Lowest Period
According to recent court documents shared by FTX creditor activist Sunil Kavuri, cryptocurrency holders are expected to get back only 10-25% of the assets they lost in the bankruptcy, which is significantly less than some had hoped.
Court documents revealed that 18% of the funds seized by the US Department of Justice will be transferred to a special “Preferred Shareholder Relief Fund” capped at $230 million. The fund is intended to compensate preferred shareholders who held shares in FTX prior to its collapse. While these shareholders benefited, many FTX crypto holders are angry that their recoveries are expected to be much lower.
“Shame on you, we got scammed twice!” one user responded to the news, echoing the disappointment felt by many.
Kavuri also highlighted a major concern regarding the valuation of assets at the time of FTX’s bankruptcy. For example, Bitcoin was priced at around $16,000 at the time of filing, compared to its current value of $65,000. Similarly, Solana was valued at $17, well below its current price of $160. This means creditors will receive refunds based on significantly lower asset values, further compounding their losses.
The news comes after FTX and its subsidiary Alameda Research were ordered to pay $12.7 billion to victims of a massive fraud in August. The company’s misuse of client funds for personal investments and political contributions was a key factor in its collapse in late 2022. FTX founder Sam Bankman-Fried was sentenced to 25 years in prison for his role in the $11 billion scam that rocked the crypto world.
*This is not investment advice.