FTX creditors are expressing dissatisfaction with the payouts they are set to receive as the collapsed exchange prepares to distribute $16 billion to make its lenders whole.
The controversy stems from the significant fluctuations in cryptocurrency prices since FTX initially filed for bankruptcy.
FTX Lenders Unhappy With 10-25% Repayments
As BeInCrypto reported, FTX creditors will get between 10% and 25% of their crypto back. Notably, the repayments will come according to the petition date, which means when crypto prices were much lower. To put it in perspective, Bitcoin’s (BTC) price was $16,000 at the time and around $65,000 now.
The creditors are upset with the decision to use petition date prices for reimbursement. They argue that this reorganization plan won’t fully compensate for their losses, many of which included life savings. Several creditors have reported severe emotional tolls, including mental distress and panic attacks, as a result of the collapse.
“Can’t understand why a law can’t protect us investors about this scam,” said one victim in response to a post by FTX creditor activist Sunil Kavuri.
Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell
Many other responses followed, reflecting the displease and dissatisfaction of the creditors. The US Securities and Exchange Commission (SEC) also pointed to potential objections, especially if the defunct exchange decides to pay off creditors using stablecoins.
The complaints come weeks after FTX and Emergent Technologies agreed to secure $600 million in Robinhood shares to make creditors whole. Noteworthy, FTX founder Sam Bankman-Fried co-founded Emergent Technologies.
Under the terms, according to a September 6 motion by FTX CEO John Ray III in a Delaware Bankruptcy Court, FTX will pay Emergent $14 million to cover administrative expenses after it withdrew a petition to claim 55 million Robinhood shares and cash. The settlement also provides a path for Emergent to expedite the resolution of its bankruptcy case in Antigua.
According to FTX, this agreement would help recover more money for its creditors and avoid further litigation costs. Per the exchange, this would mark an important step in its reorganization plan to maximize value for creditors.
Read more: Who Is John J. Ray III, FTX’s New CEO?
According to John Ray III, this reorganization plan was the result of “good faith arm’s length negotiations between the parties and that such negotiations were free of any collusion.”
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