Headline : FTX Creditors Say Payout Deal Is an Insult—and Plan to Revolt

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Some creditors of the bankrupt crypto exchange FTX are preparing to reject a plan that would see them recover 118 percent of the money they lost. The proposal is far less generous than it might seem, they claim.

Starting in January, the FTX creditors began to form a voting block, now made up of 1,600 claimants. The new plan is due to be put to a vote in June; the leaders of the block—Sunil Kavuri and Arush Sehgal—will urge members to vote against its approval. “The recovery percentages are drawn from a fake baseline. It’s a false narrative,” says Sehgal. “It’s an insult to creditors.”

FTX fell to pieces in November 2022 after running dry of funds with which to process customer withdrawals. Billions of dollars’ worth of customer funds was missing. A year later, FTX founder Sam Bankman-Fried was convicted of multiple counts of fraud and conspiracy in connection with the collapse of the exchange. In April, he was sentenced to 25 years in federal prison.

Filed on Tuesday, the FTX bankruptcy plan charts a path to a full recovery, plus interest, for practically all creditors—made possible, according to FTX, by the liquidation of billions of dollars’ worth of investments made by the exchange’s venture capital arm, FTX Ventures, and its sister company, Alameda Research.

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