Search
Close this search box.
Search
Close this search box.

FTX Bankruptcy Trustee to Set Aside $230 Million for “Special” Shareholders

FTX will set aside $230M in recovered assets to pay "special" shareholders, sparking controversy among creditors ahead of the court hearing on October 7.
ftx

The FTX bankruptcy trustee has agreed to allocate up to $230 million from recovered assets to compensate some shareholders, which has raised concerns among creditors. This move differs from traditional bankruptcy proceedings, where creditors are typically prioritized over shareholders for payouts.

The agreement, finalized on September 27 but in the works since August 28, sets aside 18% of the total assets seized by the U.S. government into a special fund for a select group of shareholders. These assets include over $600 million in Robinhood shares, $379 million in fiat and crypto assets seized from various exchanges, $150 million in cash from bank accounts, and two private jets valued at $35 million.

Many FTX creditors were surprised by this development. Sunil, one of the creditors, stated that most creditors and FTX users were unaware of this arrangement when they voted to approve the asset repayment plan in mid-August. Sunil also criticized FTX’s customer compensation plan, which estimates that 98% of creditors will receive up to 118% of their assets. He claimed this is misleading, as the recovered asset value is based on current market prices. In contrast, users are being compensated according to cryptocurrency values from November 2022, the time of FTX’s bankruptcy. Sunil estimated that creditors would receive only 10-25% of their assets when calculated at current market rates.

One of the central controversies lies in the method of repayment. The price of Bitcoin at the time of FTX’s collapse was around $16,000, and users who lost 1 BTC will be compensated $16,000 in cash, instead of the current value of around $66,000. FTX’s bankruptcy unit has defended this approach, stating it cannot settle debts in cryptocurrency due to regulatory pressure from the U.S. Securities and Exchange Commission (SEC), which has labeled many cryptocurrencies as securities.

The U.S. bankruptcy court is expected to hold a formal hearing on October 7 to approve the repayment plan. In an unrelated market event, the price of FTT tokens, associated with FTX, saw a sudden spike of 110% over the weekend, though the reasons behind this surge remain unclear.

Related news: Caroline Ellison Sentenced to 2 Years in Prison for Role in FTX Collapse

Share:

New Post

Read more

Discover Wrapped Dog (wDOG) price predictions from 2024 to 2030. Explore potential bullish and bearish trends for this decentralized crypto token.
HBO's Money Electric sparks controversy by naming Peter Todd as Bitcoin's creator, Satoshi Nakamoto, but the mystery remains unsolved.
Explore Bonk's market performance, price trends, and predictions for 2024-2030, covering both bullish and bearish scenarios in this analysis.