Creditors feel scammed again as FTX updates payout structure.
FTX’s Payout Plan Causes Uproar Among Creditors
FTX crypto holders are set to recover between 10-25% of their lost assets, according to new court filings. These documents, released by creditor activist Sunil Kavuri, detail a payout structure that leaves many feeling shortchanged.
Preferred Shareholder Remission Fund Sparks Debate
A major source of frustration is the creation of a “Preferred Shareholder Remission Fund.” This fund, which will transfer 18% of forfeited assets from the US Department of Justice, will benefit FTX’s preferred shareholders. These are investors who held equity before the company’s collapse, leaving crypto holders with significantly lower recovery percentages.
Low Recovery Rates Anger FTX Creditors
Many FTX creditors expressed their anger, feeling they are being “scammed twice” due to the low recovery rates. While the preferred shareholders stand to benefit from the special fund, crypto holders, on the other hand, face the prospect of recovering only a fraction of their original investments.
Price of Assets at Bankruptcy Affects Repayments
Another point of contention for creditors is how repayments are calculated. Repayments will be based on the value of assets at the time of FTX’s bankruptcy filing. Bitcoin, for example, was priced at $16,000 during the filing but has since skyrocketed to $65,000. This means creditors will receive compensation based on significantly lower asset prices.
FTX’s Collapse and the $12.7 Billion Payout Order
The downfall of FTX occurred in late 2022, with investigations revealing that the company had misused customer funds for personal investments and political donations. In August, FTX and its affiliate, Alameda Research, were ordered to pay a whopping $12.7 billion to the victims of the fraud.
Legal Repercussions for FTX Founder
Sam Bankman-Fried, the founder of FTX, was sentenced to 25 years in prison for his involvement in the $11 billion fraud scandal. His actions caused a ripple effect throughout the cryptocurrency world, with many investors left financially devastated.
FTX Creditors Feel Betrayed
As FTX’s payout plan continues to unfold, creditors are left feeling more betrayed than ever. The disparity between preferred shareholders and crypto holders only adds to the frustration.
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