Sujha Sundararajan

Last updated:

June 26, 2024 02:51 EDT | 1 min read

Failed crypto exchange FTX is seeking creditors vote on a liquidation plan, to wind-down payments in order to compensate customers.

Delaware judge John Dorsey, on Thursday, authorized FTX bankruptcy advisors to begin soliciting creditor votes, aiming to obtain feedback from those who were uninvolved in the repayment plan.

Per Bloomberg, FTX would likely offer customers 119% of their assets as of the day FTX filed for Chapter 11. The court document revealed that other creditors would get may receive up to 143% of their owed assets.

The court approval comes over the objections of few customers that demanded higher repayments, given the recent crypto price spike. However, according to FTX lawyer Andy Dietderich, the bankruptcy law requires FTX to value claims at the time of FTX’s failure, even though the market prices have sparked.

“We estimate that it would cost hundreds of millions of dollars to disentangle the FTX estates,” Dietderich said.

The one step closer to finalizing a reorganization plan represents a major milestone in winding-down the two-year-long FTX saga.

Additionally, FTX is in talks with federal authorities to utilize government claims against the firm to repay customer losses. The company has already settled a $24 billion tax claim from the US Internal Revenue Service, made in December 2023.

Customers Oppose FTX’s ‘Full Recovery’ Promise

The beleaguered exchange said that it would repay all customer claims in full, with interest. However, some FTX customers oppose the promise, saying the company’s claims are based on crypto prices back in November 2022.

As a result, they argued that the company’s proposed voting plan are meant to mislead customers by “breathlessly touting what they claim to be a full recovery with interest,” a Reuters report noted.

John Ray, current CEO of FTX, who took charge after Sam Bankman-Fried was ousted, told the publication that FTX would not simply repay the cryptos that customers deposited. He added that those funds are long gone and stolen by Bankman-Fried, who is facing 25 years in prison.

Ray said that repaying customers in cash would be more appropriate, given the types of crypto assets that they held. The values have fluctuated greatly since the company went bankrupt, he noted.

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