FTX creditors are expressing dissatisfaction with the payouts they are set to receive. 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 creditors will get between 10% and 25% of their cryptocurrency back. This repayment is based on the petition date, when crypto prices were much lower. For instance, Bitcoin was priced at $16,000 at the time, compared to around $65,000 now. Creditors argue this reorganization plan doesn’t cover their losses adequately.
Many creditors have reported severe emotional tolls, including mental distress and panic attacks, due to the collapse. The US Securities and Exchange Commission (SEC) has also raised potential objections, particularly if repayments are made using stablecoins.
Recently, FTX and Emergent Technologies agreed to secure $600 million in Robinhood shares to make creditors whole. FTX will pay Emergent $14 million to cover administrative expenses, which would help expedite Emergent’s bankruptcy case in Antigua.
According to FTX CEO John Ray III, this agreement is a crucial step in FTX’s reorganization plan to maximize value for creditors and avoid further litigation costs.
