- In a landmark decision, FTX, a bankrupt crypto exchange, has announced plans to repay all its creditors and customers, including interest. However, the proposed distribution plan has not been well received by all.
- FTX creditor representative, Sunil Kavuri, has opposed the plan, advocating for debts to be settled in cryptocurrency rather than their dollar equivalent at the time of bankruptcy.
- Kavuri has also alleged that Sullivan and Cromwell, the debtors, have caused substantial damage to FTX creditors, estimated to exceed $10 billion.
FTX, a bankrupt crypto exchange, plans to repay its creditors and customers. However, the proposed distribution plan has been met with opposition from FTX creditor representative, Sunil Kavuri, who advocates for debts to be settled in cryptocurrency.
FTX’s Proposed Compensation Plan
In a recent document, FTX disclosed its proposed distribution plan, which includes repaying all its creditors and customers with interest. This move has been appreciated by many in the crypto community. However, Sunil Kavuri, the FTX creditor representative, has opposed the plan. He believes that debts should be settled in cryptocurrency rather than their dollar equivalent at the time of bankruptcy.
Opposition from FTX Creditor Representative
Sunil Kavuri has urged stakeholders to vote against the proposed plan. He has highlighted several critical concerns, including the fact that Sullivan and Cromwell, the debtors, are indebted to FTX customers for the current value of their holdings, which is 3-10x the petition prices. Kavuri has also alleged that Sullivan and Cromwell have caused over $10 billion loss to creditors.
FTX’s Bankruptcy and the Crypto Market Rally
FTX filed for bankruptcy in November 2022, during the peak of the crypto winter. However, in 2023, the crypto market bounced back significantly, and so did the value of cryptocurrencies held by the exchange. FTX now plans to allocate the additional billions in cash reserves towards paying interest to its 2 million customers. This is a relatively uncommon outcome compared to typical bankruptcy settlements where creditors often receive minimal compensation.
Conclusion
The situation surrounding FTX’s bankruptcy and proposed distribution plan continues to develop. While the plan to repay all creditors and customers has been appreciated by many, it has also faced opposition. The final outcome will depend on the decisions made by stakeholders and the future performance of the crypto market.
