FTX Debtors Filed for Amended Chapter 11 Reorganization plan on December 16, potentially resulting in millions of dollars in losses for creditors of the defunct crypto exchange. The plan proposes valuing creditors' claims at crypto prices on November 11, 2022, the day FTX filed its bankruptcy petition.
In the days leading up to the FTX collapse, the cryptocurrency market entered a downward spiral. The stock market's bankruptcy filing triggered a bear market that lasted several months until 2023.
Therefore, on November 11 of last year (date of the bankruptcy petition), the prices of major cryptocurrencies were significantly lower than at the time of writing. This difference in cryptocurrency prices means that creditors will be left with considerable potential losses compared to the value of their assets based on current market prices.
For example, the price of Bitcoin (BTC) was just above $17,500 on November 11, 2022, according to CryptoSlate. data. However, over the past year, Bitcoin's price has more than doubled to $41,649.57 at the time of writing, CryptoSlate data shows. This indicates that FTX creditors will incur a loss of over $24,000 per BTC.
Similarly, the price of Ethereum (ETH) has risen from around $1,284 on November 11 to $2,214 at the time of writing, data from CryptoSlate indicates. For the creditors of the defunct exchange, that means a loss of almost $1,000 per ETH.
Sunil Kavuri, an FTX creditor, said in a mail in X that the new reorganization plan ignores FTX's Terms of Service, which "state โDigital assets are the property of users and not FTX Trading.โ
Certain classes of creditors will have the opportunity to vote on the plan before its finalization.
