Victims of the FTX bankruptcy issue said the bankruptcy process has left them feeling “aggrieved and robbed” and view it as a second act of theft.
A Friday filing in the U.S. District Court for the Southern District of New York indicates that the victims of the FTX bankruptcy are seeking a ruling that the forfeited assets of the failed crypto exchange, which amount to approximately $8 billion, belong to the customers of the exchange, rather than the bankruptcy estate.
Last month, the estate proposed a new reorganization plan that would return 118% of the claims of 98% of creditors in cash within 60 days of court approval.
Many FTX customers were displeased with the plan, as they had been unable to capitalize on the increase in cryptocurrency prices while their funds were in bankruptcy limbo.
FTX filed for bankruptcy during the “crypto winter,” when cryptocurrency prices experienced a significant decline, according to the court filing. According to the filing, assessing the value of customer claims at that time would be profoundly unjust, as the price of Solana (SOL) has increased by ninefold, and the price of Bitcoin has quadrupled since the petition date.
Adam Moskowitz and David Boies, the attorneys for the victims, stated in the filing that the bankruptcy process has left “FTX customers feeling ‘aggrieved and robbed.’
Many view the bankruptcy process as a’ second act of theft.’ The ‘FTX bankruptcy estate remains the same fraudulent corporate entity’ as the enterprise run by SBF.” former CEO Sam Bankman-Fried, sentenced to 25 years in prison for fraud, is known as SBF.
In November 2022, FTX experienced a catastrophe. The attorneys stated that the jury determined that SBF had fraudulently obtained at least $8 billion from FTX customers.
Additionally, Bankman-Fried intends to contest his conviction and sentence, which included an order to forfeit $11 billion. “If not for SBF’s crimes for which he was convicted—i.e., the theft and misuse of customer assets—the customers would have today owned their crypto investments,” according to the document.
The filing also emphasizes that the bankruptcy code necessitates prioritizing specific creditors over others. Consequently, FTX’s FTT token proprietors are relatively low on the priority list. “It is improbable that the estate will compensate the holders of that token,” it stated.
Moskowitz informed CoinDesk, “We are uncertain about the extent of the damages due to the absence of a comprehensive accounting.” Although cryptocurrency’s fluctuating value may alter the situation, it is fair to assume that damages exceeding $8 billion are due.
