FTX Creditors Initiate Lawsuit Over Digital Asset Valuation

FTX Creditors Challenge Payout Plan

A cohort of FTX's creditors have launched an adversary lawsuit to claim ownership over deposits rather than allow them to be handled as property of the now-bankrupt crypto exchange. Their objection targets the proposed reimbursement strategy, which calculates payouts based on the significantly lower cryptocurrency prices from November 2022.

Dispute Over Valuation Method

The filing emphasizes the necessity for a 'fair and compliant valuation' of the unliquidated claims, which are currently based largely on the value of digital assets. FTX's plan, which references the Digital Assets Conversion Table from Coin Metrics for estimating claims, has been designed to align with the Bankruptcy Code, aiming to treat all creditors equitably. Nevertheless, the disparity in opinions on the valuation process is apparent among the creditors.

FTX's Defense and Future Implications

FTX stands by its methodology for digital asset valuation, suggesting that an estimation based on petition date prices prevents fluctuation and treats creditors fairly. As the case progresses towards an evidentiary hearing in March 2024, the outcome of this legal skirmish holds considerable weight for the future financial restitution of FTX's creditors as well as for the wider crypto landscape.