FTX Bankruptcy Victims Seek Court Ruling to Claim $8B of Exchange\'s Forfeited Assets

In October, the estate proposed a reorganization plan aiming to return 118% of their claims to 98% of creditors in cash within 60 days of court approval.

FTX bankruptcy victims have filed a motion in court, arguing that the failed cryptocurrency exchange’s forfeited assets, valued at around $8 billion, should be distributed to its customers and not the bankruptcy estate.

The motion highlights that many FTX customers have been unable to benefit from the recent rise in cryptocurrency prices as their funds remained inaccessible due to the bankruptcy process.

FTX filed for bankruptcy in November 2022 during the “crypto winter,” a period characterized by a massive drop in cryptocurrency prices. The bankruptcy estate has proposed a reorganization plan that would return 118% of their claims to 98% of creditors in cash within 60 days of court approval.

However, attorneys representing the victims argue that valuing customer claims based on prices at the time of bankruptcy would be unfair, given the subsequent rise in crypto prices.

Solana (SOL) has increased ninefold and Bitcoin has quadrupled in value since the bankruptcy petition was filed. Lawyers for the victims contend that the bankruptcy proceedings have left many FTX customers feeling “aggrieved and robbed.”

“This second act of theft is being perpetrated by the debtors, the examiner, the U.S. Trustee, and the Department of Justice,” the lawyers stated in the motion.

The lawyers further argue that the FTX bankruptcy estate continues to be perceived as fraudulent, similar to the enterprise under former CEO Sam Bankman-Fried (SBF), who is serving a 25-year prison sentence for fraud.

A jury found Bankman-Fried guilty of stealing at least $8 billion from FTX customers, and he has been ordered to forfeit $11 billion. Bankman-Fried plans to appeal his sentence and conviction.

“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,” the filing states.

The motion also notes that the bankruptcy code prioritizes certain creditors over others, with holders of FTX’s FTT token being near the bottom of the priority list, making it unlikely they will receive compensation from the estate.

“We don’t know what the damages will be because complete accounting has not been done,” Moskowitz told CoinDesk. While the fluctuating value of crypto might change things, “it is safe to say that over $8 billion” in damages are owed.

News source：https://www.kdj.com/cryptocurrencies-news/articles/ftx-bankruptcy-victims-seek-court-ruling-claim-b-exchange-forfeited-assets.html

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