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In August, a New York judge granted final approval for FTX and its sister trading firm Alameda Research to repay $12.7 billion to FTX creditors. However, they are facing the grim reality of receiving only 10-25% of their cryptocurrency assets back, according to new bankruptcy documents shared by activist Sunil Kavuri.
The payout calculations are based on cryptocurrency prices at the time of the bankruptcy petition, when Bitcoin hovered around $16,000—far below today’s market value.
This decision has left many creditors outraged, as they hoped for compensation closer to current cryptocurrency prices. Kavuri, who has been vocal on behalf of FTX’s defrauded customers, noted the emotional toll this decision is taking.
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He shared stories of FTX customers enduring mental distress, panic attacks, and even contemplating divorce or suicide. Many had their life savings tied up in the exchange, which has yet to return any of their assets.
Outrage Over Petition Date Prices
The crux of the anger lies in the use of the petition date prices for reimbursement, a decision many creditors view as unfair given the recent surge in cryptocurrency values. Kavuri argues that Sam Bankman-Fried, the disgraced founder of FTX, violated the platform’s terms of service by using customer funds to settle debts and make personal investments.
“The terms were crystal clear—FTX customers owned their digital assets. But Sam broke those terms and transferred customer funds to cover Alameda’s loans and purchase Robinhood shares,” Kavuri explained. His accusations echo the larger frustrations of creditors who feel that justice has not been adequately served, despite Bankman-Fried being found guilty on fraud charges.
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In an effort to recover some of the missing funds, the FTX estate struck a deal with Emergent Technologies, a company founded by Bankman-Fried. The deal secured $600 million in Robinhood shares to pay back creditors, but it falls short of covering the billions lost.
Challenges to the Bankruptcy Plan
The FTX bankruptcy process has been riddled with objections, particularly to the estate’s reorganization plan. In August 2024, a U.S.-based trustee overseeing the bankruptcy process argued that the plan grants excessive legal protections to FTX administrators. This has led to further distrust among creditors who feel left in the dark throughout the proceedings.
Meanwhile, Bankman-Fried is receiving support from neurodivergence experts regarding the fairness of his conviction. They claim that his autism spectrum disorder (ASD) and ADHD played a role in his behavior during the criminal trial.
