FTX Creditors Lose Twice as Crypto Market Rally Erases Gains From Cash Repayments
Soaring crypto prices mean FTX creditors receiving dollarized repayments recover significantly less in real crypto value than they lost.Summary
Creditors of the defunct FTX exchange face significant losses because the court-approved plan converts claims to US dollars based on pre-rally values, while the crypto market has surged. Creditor advocate Suni Kavuri estimates that due to the sharp rise in assets like Bitcoin (from $16,871 to over $110,000), the actual recovery value for victims could be as low as 9% to 46% of the original crypto lost. This has sparked debate, with many creditors arguing that fixing claims in dollars at the time of bankruptcy locked in losses. Even Sam Bankman-Fried, from prison, suggested that earlier, in-kind repayments would have allowed customers to repurchase their coins before the price explosion. However, the FTX estate maintains that dollarizing claims was necessary under U.S. bankruptcy law to simplify distribution and manage volatility by setting a fixed reference point for liabilities.
(Source：BeInCrypto)