In November 2022, just days after assuring the safety of funds, the FTX exchange halted withdrawals. Subsequently, access to the exchange was completely lost. Later, the exchange was hacked, and SBF was brought back from Dominica. Finally, after the trial, Sam received a sentence of over 20 years. However, despite the long time that has passed, creditors have not been refunded their cryptocurrencies.
New Development in FTX Case
On June 25, a new hearing concerning FTX creditors took place. The refund process for the FTX exchange, which went bankrupt in November 2022 and defrauded its customers, has still not started. In the bankruptcy hearing held a few hours ago, lawyers for FTX and the creditors discussed a document providing information about the exchange’s restructuring plan.
After Judge John Dorsey of the US Delaware Bankruptcy Court approves the plan and the explanatory statement, creditors will vote before the approval hearing. FTX announced its restructuring plan in May, stating it plans to give 118% of the claims to 98% of its creditors. Claims under $50,000 can receive a compensated refund.
Objections Raised
The stance of lawyers representing a significant portion of the creditors aligns with the conditions generally accepted by investors. They want payments to be made directly in cryptocurrency rather than USD converted from token prices at the time of the 2022 bankruptcy filing. All cryptocurrencies are above their November 2022 prices, and during those days, assets had fallen to historic lows due to excessive sales.
Andrew Dietderich, the lawyer representing FTX, argues that they have presented a plan largely based on consensus and without serious objections. He also mentioned that they plan to hold a vote, one of the purposes of which is to get feedback from creditors.
Lawyer David Adler, representing the creditors, said:
“Unfortunately, it is insufficient. In the crypto cases I am involved in, there is generally a strong desire for customers to receive their crypto in kind, because if they do not receive it in kind, it is a disposal event, or people believe it could be a disposal event under US tax law. We really don’t understand what the obstacle is to doing this here. In-kind returns would also bring significant tax savings for victims.”
Although it is hoped that the determined stance of creditors on in-kind payments will yield results in the other hearings to be held on July 17 and August 15, it is unknown how a solution will be found since FTX has significantly converted these assets to cash.
