By Source: Adobe / Александр Поташев
A group of FTX creditors have filed a motion seeking to stop plans of the collapsed exchange from valuing their cryptocurrency assets based on 2022 prices.
FTX Creditors Urge for Updated Value Estimations Based on the Digital Assets Conversion Table
The creditors filed a motion urging the bankruptcy court to estimate claims based on virtual assets and fiat currency in line with the digital assets conversion table to ensure they receive the full value of their assets.
“By this Motion, the Debtors request entry of the Order pursuant to sections 502(c) and 105(a) of the Bankruptcy Code, substantially in the form attached hereto as Exhibit A, estimating Claims based on Digital Assets and fiat currency by approving the Digital Assets Conversion Table to value such Claims, including Customer Entitlement Claims, for purposes of any plan in these Chapter 11 Cases.”
As the bankruptcy proceeding continues, FTX administrators are looking to adopt an approach to value assets based on 2022 prices, which is when it filed for bankruptcy, and pay creditors in the fiat value.
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This approach will block creditors from receiving the current crypto valuations of their assets which have doubled since 2022. The bear market of 2022 was riddled with industry implosion and macroeconomic factors leading to plunging asset prices.
Since then, the market has seen high volumes of institutional inflows sparking a surge in cryptocurrency values and doubling the values of assets held by the exchange before its implosion in November 2022.
Assets like Bitcoin (BTC) have gained over 158% in value since December 2022 while altcoins like Ethereum (ETH) and Solana (SOL) have made significant gains in the same time frame.
Customers could lose crypto price gains
The Official Committee of Unsecured Creditors, in support of the creditor’s motion, argued that estimating claims collectively is the way to go.
It goes further to highlight that if the court claims that crypto deposits are not part of the estate’s property then it should be returned in kind to the customers without being used to pay other estate expenses.
The group of creditors claims that settlement of claims in respect of digital asset holdings to hasten the entire process and the claims for digital assets makes it unliquidated and must be based on the underlying assets and not fiat.
While customers claim the company’s crypto price valuation is unfair as it rips asset holders of the gains accrued in the last 12 months, FTX argues that the current bankruptcy law in the United States allows it to estimate claims using the date of bankruptcy.
The firm has since filed at the bankruptcy court that they need what is fair and reasonable to cover claims stating that it is the only practical approach, a move which resulted in the plan being on the receiving end of criticism from the wider crypto community.
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