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FTX Liquidators Draw Former Users' Anger
There's a growing sense that liquidators do not have FTX's users' best interests at heart.
Administrators for FTX have filed an updated Chapter 11 plan of reorganization. The document suggests that the value of customers' assets should be fixed at the time of the exchange's bankruptcy, in November 2022.
Unfair Accounting Practises
The move by debtors means that users who lost money when FTX collapsed, now over a year ago, could receive substantial payouts and recover most or all of their losses in fiat terms. However, they would miss out on the stellar rise in crypto prices over the past year. Since many of the assets controlled by FTX's liquidators are cryptocurrencies and tokens, this will not be well received by former customers. Bitcoin has seen a 150% increase, and Solana has risen around 800%.
Recent liquidations to "recover" funds for customers have taken place at much higher price, including sales close to the local high that were made yesterday.
Another bone of contention is that the exchange has paid enormous fees as a result of its bankruptcy proceedings. Coincidentally or otherwise, this are roughly equal to the shortfall in assets due to customers. There is a sense in the crypto world that TradFi liquidators have harvested value from the remains of FTX, and will inflict those losses on users who are already out of pocket.
Given that Sam Bankman-Fried's decision to declare FTX bankrupt marked the very bottom of the bear market, there is also the question of whether the move was the right one. SBF, now facing many years in prison, must be wondering what would have happened if he had not bowed to pressure.
If FTX had never been declared bankrupt, would he have been able to make good on the losses, get FTX's house in order, and avoid arrest?
He will never know for sure, but it's something that will be on his mind over the long weeks and months in his cell.
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