FTX creditors have expressed anger following last-minute changes to the payment schedule, with many feeling they have been underpaid for a second time.
Reduction in Creditor Payments
According to recent court documents, cryptocurrency holders are expected to get back only 10-25% of the assets they lost in the bankruptcy, which is significantly less than some had hoped.
Compensations Allocated in Bankruptcy
Court documents revealed that 18% of the funds seized by the US Department of Justice will be transferred to a special “Preferred Shareholder Relief Fund” capped at $230 million. The fund is intended to compensate preferred shareholders who held shares in FTX prior to its collapse. While these shareholders benefited, many FTX crypto holders are angry that their recoveries are expected to be much lower.
FTX Case History
The news comes after FTX and its subsidiary Alameda Research were ordered to pay $12.7 billion to victims of a massive fraud in August. The company’s misuse of client funds for personal investments and political contributions was a key factor in its collapse in late 2022. FTX founder Sam Bankman-Fried was sentenced to 25 years in prison for his role in the $11 billion scam that rocked the crypto world.
Recent changes in FTX payment schemes have sparked a wave of discontent among creditors, who fear they will be underpaid in their compensation amounts.
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