Cryptocurrency exchange FTX has stated in a court filing submitted on the 21st that it expects to negotiate a reduction in the amount of bankruptcy claims by the US government to between 3 billion and 5 billion US dollars. However, the specific amount may still change.
FTX estimates that it will have assets of $13.7 billion to pay up to $31.4 billion in legitimate claims, including $9.2 billion in customer claims and $17 billion in claims filed by the Commodity Futures Trading Commission (CFTC) and the Internal Revenue Service (IRS).
It is worth noting that FTX has stated that customer claims, Alameda Research as a lender, administrative expenses, and non-government creditors will be given priority payment before any government and tax claims. This allows customers to avoid significant dilution of their repayment amounts due to government and tax claims.
The document states that the total amount of tax claims is still uncertain, but once all government and tax claims are paid, the remaining funds can be distributed to shareholders. However, FTX also acknowledges that FTX investors and shareholders will certainly suffer from the fraudulent actions of founder Sam Bankman-Fried (SBF), and they have little hope of recovering any funds from the FTX bankruptcy.
FTX also proposes that 100% of the SDNY Remission Proceeds (funds or assets returned to FTX properties as part of the remission process by the Office of the US Attorney for the Southern District of New York or other government agencies) be used to distribute to FTX.com customers and Alameda lenders, including settlements with BlockFi.
According to the document, after deducting administrative expenses and non-government creditors’ payments, up to 25% of the distributable value will be used to pay federal income tax claims, and the remaining amount will be used to pay claims from the CFTC and other government agencies.
The payment order will be as follows:
Previously, in January, FTX stated that it expected to pay customers in “full,” but it would be based on the cryptocurrency prices at the time of the bankruptcy protection filing in November 2022 (BTC $16,871, ETH $1,258, SOL $16), which caused dissatisfaction among many FTX customers.
On the other hand, the law firm Sullivan & Cromwell (S&C), responsible for FTX’s bankruptcy, was named by legal experts for potential conflicts of interest and ethical accusations, according to The Block. Law professors Jonathan Lipson and David Skeel from Temple University and the University of Pennsylvania published a paper last week accusing S&C of using “deceptive tactics” to seize control of FTX from former CEO SBF and seek personal gain from the Chapter 11 bankruptcy proceedings.
SBF has previously accused S&C of pressuring him to apply for bankruptcy protection and forcing him to appoint John Ray as CEO. FTX creditors filed a collective lawsuit against S&C last month, claiming that the company had served as their advisor prior to FTX’s bankruptcy, had knowledge of the exchange’s operations, and ultimately supported fraudulent activities. The two professors stated:
S&C’s spokesperson refuted the paper with a statement from FTX.
(Source: 財經新報)