FTX’s Proposed Bitcoin Valuation in Repayment Plan Causes Uproar

FTX, which filed for bankruptcy in November 2022, recently filed a repayment plan that has caused widespread discontent among its customers. The plan, submitted on December 27, suggests valuing customers’ digital assets at the time of FTX’s collapse, presenting figures significantly lower than current market prices. This has led to substantial customer outrage and discontent.

The repayment plan is part of FTX’s strategy to make headway in confirming a Chapter 11 plan, aiming to return the asset values to customers and other creditors. The unique nature of this Chapter 11 case, which involves claims based on digital assets, has introduced complexities in determining fair and reasonable values for these unliquidated claims. To estimate the value of digital assets owed to customers, FTX used data from Coin Metrics and made adjustments for factors like orderly liquidation of assets, non-marketable assets, and equity-like assets.

According to the plan, Bitcoin (BTC) is valued at $16,871.63, approximately 61% lower than its current price of $42,366. There are similar discrepancies for other assets like Ethereum (ETH), Solana (SOL), and Lido (LDO), valued at $1,258, $16.247, and $1.176, respectively.

This proposed valuation has left many customers feeling significantly disadvantaged, as they stand to lose substantial value on their holdings. The dissatisfaction is particularly due to the marked discrepancy between the proposed values and the current market prices. Customers have voiced their concerns and frustrations, some seeking guidance on how to file objections or reject the FTX repayment plan. A deadline of January 11 has been set for customers to object to the plan.

As the bankruptcy case progresses, the response from FTX to these claims and their plans for the next steps of repayment are yet to be seen. Customers and industry observers await further developments and potential resolutions.

Meanwhile, the native token of the exchange, FTT, is trading at $3.1047, experiencing a significant decline of more than 26% in the past 30 days, with a further decrease of 8.6% in the last 24 hours.

This scenario highlights the ongoing challenges in the crypto industry, especially in bankruptcy cases involving digital assets. The outcome of the FTX case could set a precedent for how similar cases are handled in the future, particularly concerning the valuation of digital assets in bankruptcy proceedings.