TX Debtors Propose Amended Chapter 11 Plan: Cryptocurrency Claims Valued at Bankruptcy Date
FTX's debtors have filed an amended Chapter 11 Plan of Reorganization, which marks a significant development in the ongoing bankruptcy case of the once-prominent cryptocurrency exchange. This revised plan includes a crucial provision that sets the value of cryptocurrency claims based on their cash value at the time of FTX's bankruptcy filing on November 11, 2022. This decision comes amidst a fluctuating cryptocurrency market, where the value of many digital assets, including Bitcoin, has seen notable recovery since the bankruptcy date.
Impact on Creditors and Market Recovery
The bankruptcy of FTX had a profound impact on the cryptocurrency market, contributing to a dip in values. However, since the filing, the market has shown considerable recovery, with the global crypto market cap increasing significantly. This upswing in market values poses a stark contrast to the situation at the time of FTX's bankruptcy, which has implications for the creditors. Under the amended plan, creditors may potentially miss out on the gains realized in the market post-bankruptcy. This is especially poignant considering that even FTX's own token has almost doubled in value since the filing.
Controversy Surrounding the Plan
The reorganization plan has sparked controversy, particularly among FTX's creditors. Sunil Kavuri, a notable FTX creditor, has criticized the plan, stating that it contradicts FTX's Terms of Service, which had assured that customers owned the titles to their digital assets, not the exchange. This argument is underscored by the conviction of FTX's founder, Sam Bankman-Fried, on charges of defrauding customers, highlighting the alleged misappropriation of customer-owned digital assets.
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