In a controversial move that has sparked concerns among the crypto community, particularly FTX creditors, the collapsed exchange recently announced a deadline extension for debt submission by investors affected by the FTX crisis.
While FTX justifies the extension, probably to give affected investors ample time to file their claims, the decision has stirred mixed reactions among its creditors, who remain skeptical about the distribution process.
Meanwhile, recall that UPay, in one of its previous reports, hinted at a potential deadline extension till around June. Hence, those who have been keeping up to date with happenings revolving around FTX and its plans to compensate creditors anticipated the postponement.
Three Months Deadline Extension
Taking to X, Sunil, an FTX creditor activist, shared a post with an attached letter, revealing the imploded crypto exchange plans to extend the deadline for submission of the Proof of Debt by affected investors by about three months.
Additionally, the report disclosed that although the new bar date remains unknown, it will align with the creditors’ voting deadline, allowing them to approve a Chapter 11 reorganization plan in the US process.
FTX claims
— Sunil (FTX Creditor Champion) (@sunil_trades) May 15, 2024
Bahamas Bar date extended 10-12weeks:
End of July/August pic.twitter.com/HadnXKrDvI
FTX Reiterates Creditors Refund Participation Pattern
The shared letter on X reiterated that customers can only participate in the refund procedure via the Bahamas or US procedure but not both simultaneously.
Interestingly, the notice stated that customers will receive disclosures in June, explaining the implications of participating in either process. Furthermore, they will have approximately 6-8 weeks from the date of the disclosure release to make up their minds.
The company reassured customers that while the two methods may have distinct unique peculiarities, the distribution process would be equal and would occur concurrently, irrespective of the chosen method.
FTX's disclosure has sparked concerns in the crypto space, with many crypto analysts and investors sharing their concerns regarding the development across different social media platforms. Thomas Braziel, a renowned crypto analyst on X, took to the microblogging platform to express his skepticism over the development. He proposed a possible solution that could help the initiative to work, citing the Cryptopia case under New Zealand and UK law.
#FTX - Assuming the Terms of Service stand, it's clear that customers' balances did not match the Debtor's petition date assets. Therefore, how would the estate handle the issue of commingled assets with insufficient funds to pay everyone?
— Thomas Braziel (@ThomasBraziel) May 14, 2024
I'm still thinking through this. In the…