FTX Crash: Former Customers Demand Change in Repayment Method
The FTX crash was a shocker to the crypto world back in November 2022. The embattled cryptocurrency exchange is currently in the middle of more than a dozen lawsuits, according to The Wall Street Journal. With piling lawsuits, a few former customers of FTX are demanding a change in repayment methods for their assets.
Former FTX Clients Lament Losing Out on Crypto Increase
Former customers of the collapsed platform FTX are pushing judges to change the way they would be repaid. According to Bloomberg, former clients of the collapsed crypto exchange are saying that new rules unfairly exclude former customers from a year-long increase in the price of virtual assets.
However, these claims might face a setback in the legal battle to retrieve their money.
Prices of digital assets have risen tremendously since the FTX crash. However, under FTX’s bankruptcy plan, a person will only get the US dollar value back as of the petition date. The definition of “Petition Date Value” given in court documents is set as the “value of any Claim outlined in U.S. Dollars as of the Petition Date,” which is November 11, 2022.
This means a claimant will only be able to get back the amount of crypto as of November 2022.
People Demand Pegging Vale of Assets
According to Bloomberg, More than 80 individual customers have filed letters attacking a new plan for recovering their assets. The new plan proposes to peg the value of their digital assets to the date FTX filed bankruptcy and pay claims in US dollars instead of returning the crypto coins.
The parameters of this proposition are still negotiable between FTX and its previous clients. Previously, FTX also proposed a new agreement to ensure that consumers receive essentially equal payouts. Under the new agreement, FTX debtors and FTX Digital Markets were required to “pool assets and coordinate the establishment of reserves and the timing and amount of distributions.”
The FTX Collapse and Market Aftermath
The collapse of one of the biggest crypto exchanges happened in November of 2022 when the crypto exchange filed for Chapter 11 bankruptcy. This was also followed by the CEO of the company resigning. The move left creators, clients, and the market baffled. The meltdown of Sam Bankman-Fried-related crypto companies led to severe uncertainties in the digital asset market.
Though short-lived, the spillover effect left the financial sectors in red for weeks.
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