Victims Criticize FTX Bankruptcy Liquidation as Secondary Theft Seek Court Approval to Recover 8 Billion Frozen Assets

Bankrupt exchange FTX’s victims filed documents with the U.S. Southern District of New York Court on the 14th, claiming that the frozen assets by FTX (approximately $8 billion) belong to their customers, not bankruptcy assets, and requested the court to make a ruling.
(Summary:
FTX assets seized! Arkham: The U.S. labels Alameda’s $300 million as “government assets”
)
(Background:
Can FTX pay more? Settling with the U.S. tax agency “only paying $2 billion out of $24 billion owed” the rest is up to SBF
)
Since its closure in November 2022, the restructuring team of bankrupt cryptocurrency exchange FTX has been actively raising funds to repay creditors. According to the latest repayment plan released by the restructuring team last month, the estimated amount owed is $11.2 billion, but after the sale of assets, they will have approximately $14.5 billion to $16.3 billion in cash available for compensation. Therefore, the vast majority of users (those who held funds below $50,000) can receive approximately 118% cash compensation.
However, it is important to clarify that the compensation for losses is calculated based on the platform funds of FTX exercised on the day of Chapter 11 bankruptcy, so unless the assets held by users in FTX are stablecoins, they are still at a significant loss (BTC was only $17,000 at the time)…
Victims seek asset ownership ruling
However, against this backdrop, FTX victims filed documents with the U.S. Southern District of New York Court on the 14th, claiming that the frozen assets by FTX (approximately $8 billion) belong to their customers, not bankruptcy assets, and requested the court to make a ruling. The documents show that FTX filed for bankruptcy during the cryptocurrency bear market, when cryptocurrency prices plummeted, making it extremely unfair to measure the value of customer claims at the time:
Adam Moskowitz and David Boies, lawyers for FTX victims, stated in the submitted documents that many people view the bankruptcy proceedings as a second theft:
The documents also added that bankruptcy law requires certain creditors to be given priority, putting FTX’s FTT token holders at the bottom of the compensation order:
According to previous reports from foreign media, Adam Moskowitz, a lawyer for FTX victims, stated in an interview:
Creditors oppose the bankruptcy restructuring plan
On the other hand, according to a previous report from DONGQU, Sunil Kavuri, a representative of the FTX creditors’ committee, posted on the X community platform on the 6th, stating that the FTX creditors’ committee (CAHC) opposes FTX’s bankruptcy restructuring plan for various reasons:
Repaying in cash would trigger tax events, causing creditors unnecessary costs, and suggests repaying assets in kind as an alternative.
Creditors invoke Chapter 11 of the Bankruptcy Code to oppose releasing funds to debtors (FTX bankruptcy restructuring team),
claiming they are attempting to distribute stolen assets.
Not in the best interest of the creditors.
Additionally, Kavuri mentioned other arguments against, including the need to update the disclosure statements settled by the IRS, undisclosed litigation proceedings, inconsistent debtor liquidation analysis, and objections to the timing arrangements.