According to a recent proposal filed by FTX, the platform has decided to pay billions of dollars in cash to customers and creditors by liquidating its crypto assets. The challenge now is the large legal fees that the FTX has incurred; legal fees have become similar to the customer shortfall.
On December 18, FTX disclosed its latest proposal to return billions of dollars to its customers and creditors, possibly leading to a final ending of the FTX fraud case. Although FTX reported the reorganization plan, it still left many important questions unanswered. The details in question include FTX’s new beginning as a crypto exchange and the amount customers and creditors could expect to get back.
The revision of the Chapter 11 plan involved major creditors and customers who have agreed to the outline of the plan. The plan will be sent to all the creditors next year with key details for a vote before sending it for final approval.
The plan was to use the billions of dollars that were accumulated after liquidating crypto assets to be distributed among the customers and creditors. The claims will be based on the price that the cryptocurrency was valued at the time of collapse. Adam Cochran, a partner at CHEV, said,
Claims will be paid out at bankruptcy prices? So if you had 1 BTC, they’ll be paying you $17k instead of 1 BTC – even though most of their recovery has been in crypto or stock assets that went up?! This should be illegal. Your title rights should be protected first.
Jameson Lopp, Co-founder and CTO of CasaHODL said that the latest numbers from the FTX bankruptcy are interesting. The legal fees of FTX amount to $1.45 billion, while the customer shortfall fees are at $1.422 billion. In addition, the IRS (Internal Revenue Service) is looking to collect $24 billion in unpaid taxes from the exchange, this could reduce the amount left for the creditors.
