PYMNTS Intelligence Banner June 2024

Report: FTX Customers Feel Cheated by Bankruptcy Repayment Plan

FTX

Some former FTX customers are reportedly unhappy with the bankrupt cryptocurrency company’s repayment plans.

More than 80 customers have written to the federal bankruptcy judge overseeing the case to slam a plan to tie the value of their assets to the date FTX collapsed and pay claims in U.S. dollars, Bloomberg reported Thursday (Jan. 11), citing court documents.

That’s because the price of bitcoin — the most popular cryptocurrency — has jumped since FTX declared bankruptcy. Bitcoin holders will be owed $16,871 for each of their former coins.

However, bitcoin has surged in recent weeks as investors awaited the approval of exchange-traded funds tied to the currency. The price even topped $49,000 Thursday after that approval became official.

“The bitcoin and ethereum I held on FTX prior to the collapse were purchased nearly a decade ago,” Robert Shearer, of Bronxville, New York, wrote in his filing, per Bloomberg. “Simply put, I had no intention to sell at the market bottom price.”

However, the team handling FTX bankruptcy argued that it wouldn’t be practical to figure out the exact value of each customer’s portfolio, as there are simply too many claims, the report said.

“It is simply not realistic that the debtors would be able to liquidate every one of the millions of claims based on digital assets,” FTX said in a filing, per the report.

Observers expected FTX’s customers to protest the plan. Among them is Sunil Kavuri, who said the reorganization plan goes against FTX’s terms of service, which said titles to digital assets belonged with customers and not the exchange.

“The reason SBF was convicted beyond reasonable doubt on all seven counts was that he stole digital assets that were owned by FTX customers,” Kavuri said, in reference to Sam Bankman-Fried, the company’s disgraced founder, convicted last year of fraud.

FTX filed for bankruptcy in November 2022 in the wake of the revelation that the company had used customer funds to bail out its sister firm Alameda Research, leading to an exodus of funds as investors worried FTX would not be able to cover its debts.

For all PYMNTS crypto coverage, subscribe to the daily Crypto Newsletter.