FTX Trading Ltd. affiliated debtors have submitted a motion for the entry of an order estimating the value of claims related to digital assets and fiat currency, including customer entitlement claims. This proposal was made on December 27 in the United States Bankruptcy Court for the District of Delaware.
The motion proposed to estimate the value of various digital assets based on their prices at the time of the petition date, November 11, 2022. The Digital Assets Conversion Table included prices for approximately 500 assets in fiat and cryptocurrency, such as Bitcoin at $16,871, Ethereum at $1,258, Solana (SOL) at $16, and Avalanche (AVAX) at $14.19. Stablecoins like USDT, TUSD, and BUSD were also included but their values were slightly lower than their usual $1 peg. FTX Token (FTT) was not included, however, leveraged tokens, tokenized stocks, spot derivatives, and crypto futures were.
The debtors argued that their valuations represent a “fair and reasonable” value of these digital assets as of the specified petition date. The court will need to review and approve these valuations as part of FTX’s bankruptcy proceedings. This will involve converting the value of digital assets into cash as of the petition date using the rates set forth in the Digital Assets Conversion Table and making distributions in cash.
The proposed plan has faced criticism from FTX users. Some described it as a “scam” and expressed frustration at the extended duration of the case, suggesting accepting the offered terms to avoid further uncertainty and legal costs. Sunil Kavuri, a prominent creditor of the bankrupt firm, criticized the motion, stating that it grossly undervalued the digital assets’ worth and encouraging customers to “fight” against the proposed plan.
The FTX 2.0 Coalition, representing FTX creditors, has encouraged customers who wish to object to the proposed estimation of digital asset values to write a letter directly to the judge overseeing the bankruptcy case. Simon Dixon, the CEO of BnkToTheFuture, has also supported the idea of opposing the proposed valuations, urging FTX customers to take an active stance against the plan.
Parties involved in the bankruptcy case have until January 11 to file objections, and a hearing on the matter is scheduled for January 25. If the court approves the plan, crypto holders may miss out on gains from certain tokens since November 2022. Bitcoin has surged more than 150%, reaching $42,452 at the time of publication, while Ethereum has seen an increase of over 87%.
