Filing of FTX Debtors Controversial Valuation of Cryptocurrency Claims After Collapse
The aftermath of the FTX collapse continues to unfold along with important developments in the cryptocurrency world. In a notable move, FTX debtors submitted a proposal to determine a fair and reasonable value for user claims based on digital assets. The offering was filed in the U.S. Bankruptcy Court for the District of Delaware on December 27, 2023. We propose converting the claim to a dollar amount pegged to the value of the cryptocurrency asset as of November 11, 2022.
The filing lists fiat and cryptocurrency prices for approximately 500 assets based on their values at the time of FTX’s bankruptcy filing. The proposed price includes $16,871 per Bitcoin (BTC), Ether (ETH) is $1,258, and Binance Coin (BNB) is $286. Notably, the table excludes the expected price of the FTX token (FTT), but includes prices for leveraged tokens, tokenized stocks, spot derivatives, and cryptocurrency futures.
FTX Debtor used data from Coin Metrics to estimate digital asset prices. Courts have broad discretion in choosing how to estimate the value of claims based on digital assets. Under Section 502(b) of the Bankruptcy Code, claims must be evaluated upon the filing of a Chapter 11 petition. This approach has been used in other cryptocurrency-related bankruptcy cases, including those involving Blockfi, Voyager Digital, and Chelsea Network. The final outcome will be determined pending court approval of this motion.
This estimation method has drawn strong opposition from FTX users who have been unable to access their funds beyond November 2022. Many users believe they will miss out on the profits they could make from certain tokens since cryptocurrency prices have risen significantly since the crash. For example, the price of Bitcoin has risen more than 150% since then. Anyone wishing to challenge this presumption can send a letter to the Delaware Bankruptcy Court without an attorney.
FTX claims are currently trading at approximately $0.67 on the dollar on the Claims Market, a subsidiary of Cherokee Acquisition. The trading platform also handles claims from other notable cryptocurrency bankruptcy cases, such as Chelsea. BlockFi. These claims transactions involve movements of millions of dollars and reflect ongoing market dynamics following the FTX collapse.
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