Recently, collapsed crypto exchange FTX has made last-minute changes to its payout plans, setting aside only 10-25% for FTX crypto holders. Additionally, FTX has allocated $230 million worth of proceeds from government forfeiture actions for the benefit of shareholders. The revised reimbursements came as a surprise to creditors, who were unaware of the provision. The agreement was apparently finalised after the creditors voted on a liquidation plan and was revealed 30 days after the deadline. Traditionally, in a Chapter 11 bankruptcy proceeding, shareholders are reimbursed last after creditors. The filing noted that both debtors and preferred shareholders “each have an interest in avoiding the cost, expense and delay that would be associated with litigation in connection with the Plan and the Forfeiture Proceeds.”
In the revised agreement, “extra money is being transferred to shareholders,” as explained by FTX creditor-activist Sunil. He added that creditors would receive reimbursements according to the petition date when crypto prices were lower than today. For instance, Bitcoin was trading at $16,000 when the legal petition was filed. However, the largest crypto trades at $64.47 at press time, sparking outcry among FTX creditors. Additionally, Sunil noted that the new revised document has led many FTX customers to suffer from mental distress and panic attacks, as their life savings have been stolen and the property is not being returned. FTX creditors took to social media, criticising the latest agreement and expressing dissatisfaction with the sudden changes in the payout structure.
The FTX token (FTT) has been up 60% in the last 24 hours, with FTT’s trading volume soaring 3734%. As a result, the token has become the market’s biggest gainer by a large margin. The sudden spike in FTT’s value was unusual, given that the token fell over 90% after FTX’s fraudulent activities were exposed, leading to its bankruptcy in 2022. FTT is currently trading at $2.18, though it does not have an intrinsic value. The increase in FTT’s value has raised eyebrows among investors and market watchers, given the controversial history of FTX and its sudden collapse. The spike in FTT’s value has also sparked concerns among FTX creditors, who feel that the revised payout plans heavily favour shareholders over creditors.
The revelations about FTX’s revised payout plans have caused a stir in the crypto community, with many raising concerns about the fairness and transparency of the process. The fact that creditors were unaware of the provision and the sudden changes in the payout structure have sparked outrage among FTX customers. Many have taken to social media to express their dissatisfaction with the situation, with some accusing FTX of scamming crypto holders twice. The controversy surrounding FTX’s payout plans and the sudden spike in FTT’s value have once again brought to the fore the risks and uncertainties associated with investing in the crypto market. Investors are advised to exercise caution and conduct thorough research before investing in any digital assets or cryptocurrency projects.
