FTX customers have voiced strong objections to the cryptocurrency exchange’s bankruptcy plan, arguing that it unlawfully disposes of their assets to settle debts with third-party creditors, including the U.S. government.
This pushback is orchestrated by the FTX Customers Ad Hoc Committee, determined to protect their rights and reclaim their cryptocurrency rather than settle for cash compensation.
Rights Over Assets
On June 19, a representative from the committee highlighted their stand underscoring a discrepancy in the terms of service between FTX and another bankrupt crypto firm, Celsius. Unlike Celsius customers, FTX users never transferred ownership of their digital assets to the platform, which technically should mean the assets still belong to the users, and not to the FTX estate.
Legal and Customer Reactions
The dispute hinges on the legal interpretation of ownership and customer rights, challenging the proposed method of compensating the owed parties. The plan suggests converting the cryptocurrencies into cash to facilitate repayment, a method that committee members argue lacks legal grounding insisting on a direct return of their digital holdings.
Moreover, Sunil Kavuri, a board member of the committee, expressed dissatisfaction with the approach FTX is taking, which includes using customer assets to cover fines and other financial obligations owed by the exchange. The legal battle is set to intensify, with a court hearing scheduled for June 25 to deliberate on these issues.
This contention highlights the ongoing complexities and legal entanglements following one of the most significant collapses in the cryptocurrency world, shaping up to be a pivotal case in crypto bankruptcy law.
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