Following the collapse of FTX, the exchange investors were promised reimbursement of their cryptocurrencies. The returns would be reimbursed from the $16 billion distribution. However, they were upset that the returns were based on the exchange’s price at the time of the plea.
In perspective, Kavuri stated that Bitcoin was trading at $16K at the time of the plea, whereas its price at the time of writing is over $64K. This led to a public outcry from many investors on the X platform. Many alleged that the exchange was scamming them ‘twice’.
According to an X post by FTX creditor Sunil Kavuri, FTX will transfer about 18% of DOJ forfeiture funds up to $230 million to FTX equity holders. He also added that FTX’s crypto holders will get 10% to 15% of their crypto back.
FTX is transferring 18% of DOJ forfeiture funds up to $230m to FTX equity holders (Plan supplement)
FTX crypto holders are getting 10% to 25% of their crypto back pic.twitter.com/3f6BePpoNU
— Sunil (FTX Creditor Champion) (@sunil_trades) September 28, 2024
The investors added that the last-minute changes in the payout plan had caused physical and emotional disturbances to investors. Many experienced mental stress, panic attacks, and suicidal thoughts, as most of the lost funds were their life savings. Kavuri stated that the returns would be initiated after the Court’s hearing on October 7. Further, the US SEC stated that the exchange might face issues if it used stablecoins to pay off its creditors.
Ex-CEO of FTX Files Appeal for a New Trial with a New Judge
Earlier this month, the now-defunct exchange FTX made a deal with Emergent Fidelity Technologies to secure $600 million in shares in Robinhood. This deal will push FTX to pay Emergent about $14 million for administrative expenses, and Emergent will drop its claim over the $55 million shares in Robinhood. This move was made to avoid the pricey litigation charges. This agreement reveals FTX’s strategy of restoring value to its creditors and avoiding lengthy litigation battles.
The FTX exchange, founded in 2019 by Sam Bankman-Fried, was a centralized crypto exchange. It was backed by various entities such as Alameda Research, BlackRock, Temasek, Coinbase Ventures, OTPP, and Sequoia Capital. In November 2022, the exchange announced bankruptcy, following the arrest of its founder for exploiting customer funds. On September 25, 2024, the CEO of Alameda Research got two years in jail for being part of the heist.
