On the 31st of January, a group of FTX creditors filed an adversary lawsuit following a recent appeal seeking compensation for lost profits from Bitcoin’s price surge since the exchange’s bankruptcy.
The creditors argue that under FTX’s terms and conditions, user deposits belong to customers. Hence, they want payouts based on current Bitcoin prices over $40,000.
However, FTX’s repayment plan values Bitcoin at only $16,871, which was the price when it filed for bankruptcy.
However, FTX acknowledged the creditors’ argument but maintained repayment must follow bankruptcy law. This mandates reimbursement at filing value regardless of who owns the assets. The judge has also approved FTX’s repayment plan as fair and reasonable.
Nonetheless, creditors Sunil Kavuri, Ahmed Abd-El-Razek, and Pat Rabitte demand the court decide if deposits belong to users. They believe being repaid at current prices could make creditors whole.
Yet FTX argues that even if assets belonged to creditors, their plan to sell and distribute proceeds remains unchanged. Most claims vastly outweigh FTX’s assets.
The judge cited having no authority to diverge from the bankruptcy code requiring filing date valuations. Hence, the lawsuit’s odds seem low.
Also Read: DOJ Indicts Trio in $400 Million FTX SIM-Swapping Hack
