FTX creditors have submitted a move in an effort to prevent the collapsed exchange from valuing their bitcoin holdings based on 2022 values. The action was filed in an effort to block the exchange's intentions.
Creditors of FTX have requested that updated value estimates be provided, which are based on the digital assets conversion table.
A motion was submitted by the creditors, requesting that the bankruptcy court estimate claims based on virtual assets and fiat currency in accordance with the digital assets conversion table. This would guarantee that the creditors obtain the full value of their assets during the bankruptcy process.
"By this Motion, the Debtors request entry of the Order pursuant to sections 502(c) and 105(a) of the Bankruptcy Code, substantially in the form attached hereto as Exhibit A, estimating Claims based on Digital Assets and fiat currency by approving the Digital Assets Conversion Table to value such Claims, including Customer Entitlement Claims, for purposes of any plan in these Chapter 11 Cases," the motion reads. "The Order will be entered in accordance with Exhibit A."
As the bankruptcy procedure progresses, the administrators of FTX are considering adopting a strategy to value assets based on the prices that were in effect in 2022, which is the year that company filed for bankruptcy, and to pay creditors in the appropriate fiat currency.
As a result of this strategy, creditors will be prevented from getting the current crypto prices of their assets, which have increased by a factor of two since 2022. During the bear market that occurred in 2022, which was characterized by the collapse of industries and the impact of macroeconomic variables, asset values plummeted.
Since that time, the market has seen significant amounts of institutional inflows, which have resulted in a boom in the value of cryptocurrencies and have doubled the value of assets held by the exchange before to its collapse in November of 2022.
Since December 2022, the value of assets such as Bitcoin (BTC) has increased by more than 158%, while the value of other cryptocurrencies like as Ethereum (ETH) and Solana (SOL) has increased by a substantial amount over the same time period.
As a means of providing support for the motion made by the creditors, the Official Committee of Unsecured Creditors stated that the most effective method would be to estimate claims collectively.
In addition, it emphasizes that in the event that the court decides that cryptocurrency deposits are not a part of the estate's property, then the coins should be returned to the consumers in their original form, and they should not be used to pay for any other estate expenditures.
The group of creditors asserts that the processing of claims pertaining to digital asset holdings should be accelerated in order to speed up the whole process. Furthermore, the claims for digital assets should not be liquidated and should instead be based on the assets that are being held, rather than on fiat currency.
FTX contends that the present bankruptcy legislation in the United States permits it to estimate claims by using the date of bankruptcy, despite the fact that customers complain that the company's crypto price estimation is unjust since it deprives asset holders of the profits that have been accumulated over the course of the last year.
Since then, the company has submitted a petition to the bankruptcy court indicating that they need what is fair and reasonable to pay claims, arguing that this is the only feasible option. As a consequence of this action, the plan has been subjected to criticism from the larger crypto community.
