Customers have raised numerous objections to the proposal that had been submitted by FTX estate debtors, which dictated that customer assets be reimbursed on their value as of November 11th, 2022.
An FTX client hailing from France made a notable objection who criticized the estate for imposing exorbitant charges for their services, thereby depleting creditor funds.
The customer was dissatisfied with the proposal of receiving compensation in fiat currency, particularly considering that the valuation of crypto assets was at its lowest in years at that time.
The proposal
The reorganization plan of FTX has proposed that customers be compensated in fiat currency based on the value of their crypto assets at the time of the bankruptcy filing of the crypto exchange.
It is understandable that clients are unhappy with the said proposal, given that Bitcoin has been valued at $16,871 by the ‘Digital Asset Conversion Table’, even though it is currently valued at just above $40,000.
The bankruptcy court docket received a number of objections after the said proposal was submitted. A customer from Portugal highlighted that creditors are suffering from significant losses.
According to this client, $500 million have been charged in fees during the bankruptcy process, which he thinks should have utilized for providing benefits to the customers.
The criticism
He went on to say that certain parties have an incentive in this situation to prolong the bankruptcy proceedings because it would lead to more fees.
The Portuguese individual also argued that valuing crypto assets as of their prices on November 11th, 2022 is a direct contradiction to the Terms of Service (ToS).
In addition, a French customer claimed that valuing customers’ crypto assets at their valuation in November 2022 was akin to ‘stealing’ from the victims.
This customer wrote a letter to Judge Dorsey and urged to intervene in order to prevent what was referred to as a ‘second theft’.
Another individual objected to the conversion table and noted that the value of their claim was 22.5 times higher than the date specified.
They argued that approval of the proposal would be unfair to a major class of customers. The client further said that the ToS state that the crypto assets belong to owners and there should not have been any co-mingling.
The details
The proposal had been unveiled in December 2023 and since then, it had received a stream of objections.
The said objections have been accumulated in the court docket that the Kroll Restructuring Administration hosts.
Letters have been submitted by numerous creditors and they have asked the judge to consider various alternatives instead of adhering to the strategy proposed by the FTX estate.
In addition to these objections, a trend of transferring the claims to various entities has also come to light.
The current market values for FTX claims indicate that sellers are demanding $0.77 on the dollar, while the bids start at $0.72.