Recently, FTX’s creditors have submitted a modified Chapter 11 reorganization plan to the court on December 16th. Notably, this plan has the potential to result in millions of dollars in losses for the exchange’s creditors, given that the proposed plan values the creditors’ claims at cryptocurrency prices as of November 11, 2022, the date FTX filed for bankruptcy.
Specifically, on November 11, 2022, cryptocurrency prices were significantly lower compared to their current levels. For instance, the price of Bitcoin (BTC) was just above $17,500 when FTX collapsed, whereas it has now more than doubled to $42,000. Similarly, Ethereum’s price has increased from $1,284 on November 11, 2022, to $2,214 at the time of writing.
The price disparity in cryptocurrencies means that creditors will face substantial losses when compared to the current market value of their assets.
Sunil Kavuri, a creditor of FTX, noted in a post on X that the new reorganization plan disregards FTX’s terms of service, which explicitly state that digital assets belong to users, not FTX Trading.
However, it’s important to emphasize that this is still a proposal. Certain creditors will have the opportunity to vote on the plan before it is finalized.