• 17 July, 2024
News

FTX Faces Rug Pull, Celsius Creditors Navigate Unpredictable Market

Bitcoin Advocate Simon Dixon’s recent warning on the FTX bankruptcy scenario has come to fruition. FTX is facing a scenario akin to a rug pull, while Celsius creditors grapple with uncertainties in the market. 

Reportedly, in a bid to repay billions to customers and creditors, FTX’s latest proposal outlined plans to liquidate its crypto assets for cash payouts. Then, FTX Trading reached a with FTX Digital Markets’ liquidators to pave the way for a fairer distribution of assets for customers involved in both the U.S. and Bahamian bankruptcy proceedings.

Bankrupt cryptocurrency platform, FTX finds itself entangled in what Dixon refers to as a “rug pull.” FTX claims, reportedly locked in at the market’s bottom, paint a bleak picture for stakeholders. 

The FTX 2.0 Customer Coalition sheds light on the gravity of the situation by revealing that FTX has submitted an Estimation Motion to dollarize customer claims as of November 11, 2022. Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) claims are specified in dollar amounts. 

The motion outlines that non-customer creditors, including shareholders, must receive the remaining assets if customers do not claim their share. An impending deadline of January 11 adds a sense of urgency for customers to voice objections if they disagree.

Meanwhile, Celsius creditors find themselves in a precarious position, having sidestepped potential losses by retaining Bitcoin and Ethereum  holdings, avoiding a sell-off before Bitcoin reached $54,000. However, the unpredictable nature of the cryptocurrency market keeps creditors on edge.

A letter of support from Simon Dixon and David Kahn, representing creditor Bank To The Future, offers insights into the Celsius bankruptcy case. The letter emphasizes the urgency of exiting Chapter 11 swiftly to limit the risk of further losses due to crypto-to-dollar pricing arbitrage.

The letter advocates for the MiningCo transaction as the only viable path forward for creditors, citing the lack of alternatives and the potential harm of re-solicitation. The authors stress the importance of timing in the cryptocurrency market and propose a higher capitalization of $225 million for MiningCo to drive a stronger valuation.

Drawing parallels to past Bitcoin bankruptcies, including the cautionary tale of Mt. Gox, the letter urges caution and emphasizes the need for a swift resolution to maximize creditor recovery.

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