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FTX, the cryptocurrency derivatives exchange based in the Caribbean, has revised its reorganization plan to address claims concerning the valuation of cryptocurrencies held by the company. The revised plan proposes an alternative solution to the current dispute surrounding the ownership and trading of Bitcoin (BTC) and Ethereum (ETH) tokens by the exchange.
The dispute was sparked when the exchange filed for reorganization in June 2020 amid concerns about its solvency and the lack of liquidity in crypto assets. Under the reorganization plan, FTX avoided having to enter into bankruptcy proceedings by leaving creditors with no choice but to accept a pro-rata distribution of funds.
The revised plan seeks to resolve the issue of disputed cryptocurrency claims, through a proposed valuator working in conjunction with the FTX to assess the correct value of the cryptocurrencies held by the exchange. Based on the valuator’s assessment and understanding of the current crypto markets, the plan will use its findings to determine the total amount of outstanding cryptocurrency claims and calculate an appropriate recovery rate to distribute among stakeholders.
The plan will also require creditors to exchange their Bitcoin and Ethereum tokens for a stablecoin such as USDC in order to receive payments from the exchange. Creditors will benefit from the revised reorganization plan as FTX will commit to an additional level of transparency regarding its cryptocurrency holdings in the coming months.
In addition, the revised plan has proposed an equity stake in the exchange for creditors in order to incentivize them to participate in the restructuring. Although the details are still under discussion, it provides a collective action mechanism to agree on a sustainable solution for all parties involved. This proposed equity stake in the FTX shall allow the creditors to keep track of the exchange’s operations in the future.
Overall, the revision of the FTX reorganization plan addresses the key issue of disputed cryptocurrency claims by providing an effective alternative to the current dispute, through engagement with a valuator and offering equity stake recoveries. The new proposal will also serve as a benchmark for other companies seeking to offer similar solutions and frameworks in the future.