The crypto exchange FTX has chosen not to relaunch its operations and will liquidate its assets to reimburse its customers in bitcoin. However, under US bankruptcy law, refunds will be calculated based on the value of bitcoin from November 2022, when it was trading below $18,000.
Calculation of refunds based on November 2022 bitcoin prices
According to US bankruptcy law, FTX must reimburse its customers based on the value of crypto assets as of November 2022, when it files for bankruptcy. However, bitcoin was worth less than $18,000 at that time. Which is well below its current levels around $25,000. Many customers therefore believe that they will be shortchanged and will not recover all of their funds.
Judge Dorsey emphasized, however, that he was required to strictly apply bankruptcy law. Therefore, it could not account for the current higher prices. This decision has caused dissatisfaction among many FTX customers, who believe they are being wronged. Judge John Dorsey, however, ruled in favor of FTX! Stressing that the law requires debts to be repaid on the basis of their value at the time of filing for bankruptcy.
FTX Customer Dissatisfaction and Ongoing Investigations
This decision prompted the dissatisfaction of many customers, who consider this method of calculation unfair. FTX has clarified that only legitimate refund requests will be honored, after investigations.
The exchange recovered more than $7 billion in assets to make repayments. It also works with regulators to prioritize customers in this process.
The news caused the price of the FTT token to plunge by 40%, worsening the mistrust in FTX since the bankruptcy at the end of 2022. Its former CEO Sam Bankman-Fried, indicted for fraud, is still on the sidelines.
FTX’s choice to reimburse based on November 2022 bitcoin prices is causing controversy. Many customers feel wronged. But the bankruptcy law leaves little room for maneuver. FTX tries to reassure by claiming to collaborate with regulators who are investigating the legitimacy of the requests. But despite these actions, mistrust remains great after this fiasco.
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