FTX Creditors Demand Crypto Repayment Over USD: Why?

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As a crypto investor who lost a significant amount of funds during the FTX collapse, I’m deeply frustrated and angry about this situation. I understand that FTX is trying to repay us, but the approach they’re taking feels like another loss rather than a true payback.

As a researcher, I’ve uncovered some recent developments regarding the collapse of FTX towards the end of 2022. This unfortunate event left many individuals without their hard-earned funds. However, there is some promising news: FTX’s legal team has declared their intentions to reimburse those affected. The plan includes returning all losses up to $50,000 for each individual, offering a 118% return, which encompasses not just the original amount lost but also additional compensation as interest.

However, before FTX can implement this plan, it requires approval from the Delaware court as the company is not intending to relaunch the exchange, but rather to reimburse affected individuals instead.

FTX has announced that it will return all the funds to its users in US dollars. However, this decision is met with mixed feelings among some customers. Those who suffered losses had initially invested in cryptocurrencies rather than cash. They are concerned that receiving dollar refunds could mean missing out on potential future gains if the value of cryptocurrencies rises again.

Several individuals, including users and creditors, are displeased with the decision to remunerate them in dollars instead of cryptocurrency. Initially, they had invested their funds in digital assets rather than fiat currency. This concern arises from the fear that they might miss potential gains if the value of crypto appreciates in the future.

FTX users have recently received an email from “claims@ftx.pwc.com” (instead of Kroll) about the claims process. Some customers have found that when exchanging their COIN holdings to USD on FTX, the platform uses the bankruptcy’s lowest exchange rates to determine the value. This results in users being offered a lower amount in USD than what their COINs are currently worth.

Based on the given calculation, I discover that an individual holding approximately $40,000 in COINs could potentially be limited to receiving around $16,000’s worth instead.

Why are creditors furious about this decision?

Customers have expressed doubts regarding the equity of this method. They maintain that as they held COINs on FTX.com rather than US dollars, they are entitled to receive an identical value of their original assets in return.

The consequence of this has sparked debates over the genuine refund-like quality of this process. To some, it seems more like another setback instead of a proper reimbursement. Others go so far as to label it as theft.

Ronitovi, a Reddit user, voiced his frustration by saying, “This isn’t retaliation – it’s just another instance of being robbed following the previous event.”

Customers are inquiring whether they can circumvent this system or if declining the proposed offer leaves them empty-handed. Furthermore, they are pondering the possibility of taking legal action regarding this issue.

Following the market turmoil, the price of cryptocurrencies such as Bitcoin has significantly increased. For instance, when FTX suffered a setback, Bitcoin was priced below $20,000. However, its current worth surpasses $62,000. Consequently, though clients will receive their funds back, they won’t recover the potential gains that would have been realized if their Bitcoins had continued to appreciate in value.

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2024-05-09 15:50