tl;dr
A group of creditors of the bankrupt crypto exchange FTX filed an adversary lawsuit in response to the proposed payout plans, seeking to establish that deposits are their property rather than FTX’s. The proposed plan would see creditors repaid based on November 2022 prices of digital assets, which a...
A group of creditors of the bankrupt crypto exchange FTX filed an adversary lawsuit in response to the proposed payout plans, seeking to establish that deposits are their property rather than FTX’s. The proposed plan would see creditors repaid based on November 2022 prices of digital assets, which are significantly lower than their current values. Creditors are demanding fair valuation of digital assets and a centralized approach for valuing unliquidated claims, while FTX proposes dollarizing the values of claims based on digital assets other than fiat and stablecoins. As the legal battle unfolds, the court’s decision on the valuation of digital assets and the lawsuit’s resolution will have significant implications for FTX’s creditors and the broader crypto community.
In their filing, the creditors highlight the need for a centralized approach to value the millions of unliquidated claims based on digital assets in the Chapter 11 Cases. They argue that a “fair and compliant valuation” is necessary for plan solicitation, voting, setting reserves, and making distributions. Most of the value of claims against FTX is based on US dollar-denominated fiat and stablecoins. At the same time, a significant portion includes other assets that are not easily converted to US dollars. To address this, FTX proposes dollarizing the values of claims based on digital assets other than fiat and stablecoins. They rely on a Digital Assets Conversion Table, based on Coin Metrics pricing, to estimate the claims’ values. FTX believes that valuation based on the petition time pricing for digital assets is required under the Bankruptcy Code and offers the “most equitable approach.”
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