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FTX customers are up in arms over the proposed bankruptcy plan, with some arguing it violates their property rights and forces them to accept cash instead of their cryptocurrency holdings. The FTX Customers Ad Hoc Committee, formed to represent customer interests, is leading the charge against the plan.
A Key Difference in Terms of Service?
Committee member Sunil Kavuri argues that unlike Celsius Network, another bankrupt crypto lender, FTX customers never relinquished ownership of their crypto assets. He emphasizes that the terms of service are crucial, stating, “We never gave our coins to FTX. If we don’t give [the] title of our coins to FTX, [then] FTX is obligated to return those coins.”
Selling Assets to Pay Creditors?
Kavuri further alleges the plan involves selling customer assets to pay unsecured creditors, including the U.S. government. He questions why customers should be responsible for these debts and claims FTX used customer funds to repay other creditors like Alameda Research and Binance.
FTX Estate Offers Rebuttal
The FTX estate, however, maintains the plan allows customers to recover everything they are owed. Reports suggest nearly all customers will receive their money back with interest, with those owed less than $50,000 potentially receiving a bonus.
Customers Divided on the Plan
While some customers support the plan for a quicker return of funds, others like Kavuri believe it falls short. They argue the exchange lacks legal grounds to convert crypto to cash and pocket a portion of the proceeds.
Also Read: FTX From Ashes to Riches? Debt Repayment Plan Pumps FTT, USTC, LUNA (Will They Moon?)
A Fight on Multiple Fronts
Property rights are just one battleground in the FTX bankruptcy saga. Customers are also suing the exchange’s former legal representatives, and the committee is contesting assets seized from Sam Bankman-Fried during his criminal trial.
The Road Ahead
A hearing to approve the plan’s disclosure statement is scheduled for June 25th. If approved, the deadline for voting on the plan is August 16th. The outcome of this vote, along with the ongoing legal battles, will determine how much, if any, cryptocurrency exchange customers will recover.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
