FTX's Compensation Proposal Raises Questions Amidst Bankruptcy Recovery Efforts

FTX, the cryptocurrency exchange that collapsed in November 2022, has proposed a plan to repay creditors as much as $16.3 billion, including billions in compensation for the time value of their investments. However, some critics argue that the plan falls short of being fair because it reimburses creditors based on the value of their assets at the time of the bankruptcy rather than at current market prices. FTX CEO John J. Ray III stated that the proposed Chapter 11 plan aims to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors. The plan is subject to approval by the United States Bankruptcy Court for the District of Delaware. Despite the proposed repayment, dissatisfaction has been expressed by industry pundits such as Mike Belshe, CEO of BitGo, who highlighted that creditors won't recover their funds equivalent to current market prices. FTX's restructuring efforts have included selling shares in companies like Anthropic, but the exchange confirmed that it will not be rebooting its operations.