FTX debtors value their cryptocurrency claims based on market prices on the date of the petition.
Debtors of now-defunct cryptocurrency exchange FTX have filed an amended Chapter 11 reorganization plan that stipulates that the value of customer asset claims will be retroactive to when the exchange collapsed in November 2022.
In a recent court filing in the U.S. Bankruptcy Court for the District of Delaware, the debtors explained that for purposes of holder compensation, any customer claims against the exchange will be based on their values as of Nov. 11, when the exchange filed for bankruptcy. , 2022.
It states that the amount charged will be determined based on the cash conversion value of the cryptocurrency asset using the conversion rate specified in the conversion table.
However, the price of the cryptocurrency has risen since the bankruptcy filing. Bitcoin (BTC) was valued at $17,036 at the time of filing, but the price at the time of disclosure was $42,272.
Meanwhile, last month, on November 30, FTX was approved to sell about $873 million in trust assets, with the proceeds intended to repay the collapsed exchange’s creditors.
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Joseph Moldovan, chair of the Business Solutions, Restructuring and Governance practice at New York-based law firm Morrison Cohen, previously explained the complexities of the FTX bankruptcy to Cointelegraph.
“The most unusual thing about the FTX bankruptcy is that the debtor was a complex entity with significant debt,” he said.
FTX Debtor has applied for reorganization. plan
Most importantly, it ignored the FTX TOS, which states that digital assets are the property of users and not FTX transactions.
Under the plan, digital assets will be valued based on their petition date conversion rate (price). pic.twitter.com/WTj07nlOP5
— Sunil (FTX Creditor Champion) (@sunil_trades) December 16, 2023
Meanwhile, Cointelegraph reported on December 7 that the FTX 2.0 Customer Ad Hoc Committee proposed revising the reorganization plan to balance stakeholder interests.
There has been significant scrutiny recently regarding cryptocurrency asset activity involving FTX and Alameda Research.
A December 9 report found that wallets linked to these non-existent entities had transferred $23.59 million worth of digital assets to several cryptocurrency exchanges.
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