In a last-minute move, the collapsed crypto exchange FTX has altered its compensation plans, allocating only 10–25% of the funds to FTX crypto holders.
In addition, FTX has allocated $230 million in proceeds from government forfeiture actions to shareholders. The company is transferring “18% of DOJ forfeiture funds” to FTX equity holders, according to Sunil Kavuri, a creditor-activist for FTX.
The revised reimbursements were unexpected by creditors, who were oblivious to the provision. The agreement was finalized following the creditors’ vote on a liquidation plan and disclosed 30 days after the deadline.
In the past, Chapter 11 bankruptcy proceedings have prioritized creditors over shareholders. Debtors and preferred shareholders, in the filing, stated, “Each has an interest in avoiding the cost, expense, and delay that would be associated with litigation in connection with the Plan and the Forfeiture Proceeds.”
The revised agreement “transfers additional funds to shareholders,” Sunil clarified in an X conversation. In addition, he stated that creditors would be reimbursed by the petition date, which would occur when crypto prices were lower than they are currently.
For example, Bitcoin was trading at $16,000 at the time of the legal petition’s submission. The most significant crypto transactions at $64.47 at press time have sparked an outcry among FTX creditors.
FTX Crypto Holders Spark Outrage
In addition, Sunil observed that the newly revised document has resulted in numerous FTX customers experiencing panic attacks and mental distress as a result of the theft of their life savings and the failure to return the property.
Also, FTX creditors expressed their dissatisfaction with the most recent agreement and criticized it on social media. “It is revolting that they have inserted this into the plan so late, following the vote,” wrote one user.
FTX has defrauded crypto holders “twice,” according to another creditor.
At the same time, the FTX token (FTT) transaction volume has increased by 3734%, resulting in a 60% increase in the past 24 hours. This has resulted in the token being the market’s largest gainer by a significant margin.
The token’s sudden surge was uncommon, as it had plummeted by more than 90% after the disclosure of FTX’s fraudulent activities, which resulted in its bankruptcy in 2022. Although it lacks an intrinsic value, FTT currently trades at $2.18.
