Amidst a surging crypto market, FTX finds itself at the center of discontent as numerous users contest the company’s decision to appraise their digital assets using November 2022 prices. Customers argue that FTX’s approach denies them the benefits of the substantial rebound in cryptocurrency values.
In a poignant letter to U.S. Bankruptcy Judge John Dorsey, Anthony Maurin expressed feeling “aggrieved and robbed” due to FTX’s bankruptcy proceedings, which restricted access to his account. He went on to denounce the exchange’s bankruptcy plan as a “second act of theft.”
The proposed plan involves reimbursing customers in U.S. dollars based on cryptocurrency prices at the time of FTX’s bankruptcy filing. While FTX cites U.S. bankruptcy law as the basis for using this valuation date, customers contend that it undervalues the dynamic nature of cryptocurrencies, particularly those that have experienced significant growth since the 2022 market downturn.
A global chorus of discontent has emerged, with FTX customers from various corners of the world filing objections in U.S. bankruptcy court. They argue that the plan disproportionately favors stablecoin holders and external investors who acquired FTX bankruptcy claims at a lower cost.
Notably, Bitcoin, Ether, and Solana, three major cryptocurrencies held by FTX customers, have seen substantial price increases since the company’s collapse in November 2022. Bitcoin, for instance, has surged from $16,871.63 to about $46,000.
In addition to contesting the cryptocurrency valuation, some FTX customers express dissatisfaction with the company’s decision to assign a value of $0 to its equity shares and proprietary crypto token, FTT. This move would effectively erase over $700 million in FTT and FTX equity held by customers.
FTX justifies its valuation strategy, asserting that aligning crypto prices with the bankruptcy petition date is the most practical way forward for repaying customers. The company points to precedents set by other bankrupt crypto firms, including Celsius Network, BlockFi, and Voyager Digital, which were allowed to use petition-date prices for claims valuation.
While FTX aims to allocate at least 90% of its assets to repay customers, dissenting voices among customers continue to rise. The official creditors committee and an ad hoc group of non-U.S. customers have thrown their support behind FTX’s proposal, but the controversy persists.
As the dispute unfolds, FTX faces a critical Jan. 25 court hearing in Wilmington, where approval for its cryptocurrency price list will be sought. The case, titled “FTX Trading Ltd,” is currently under consideration in the U.S. Bankruptcy Court for the District of Delaware (Case No. 22-11068).
