Bitcoin is worth $69,000 — unless you’re an FTX creditor
Unfortunately, it’s not looking good for FTX customers looking to raise the tragically low bitcoin price that the bankruptcy estate will use to calculate their repayments.
Yesterday, a US bankruptcy judge denied a victim’s request to use a higher price than $16,871. Specifically, the judge denied Australian Bitcoin miner NuGenesis Ou’s request to vacate a January 31 ruling that set the USD calculation date for crypto asset pricing to November 11, 2022.
On a separate and unrelated issue, NuGenesis also complained about FTX calculating the price of its proprietary token, NuCoin, at $0 as of November 11, 2022. More relevant to most customers who simply owned bitcoin or major altcoins, however, is that the bankruptcy judge denied NuGenesis’ request to move the USD calculation date away from November 11, 2022 for any crypto asset.
NuGenesis’ attorney argued that the company didn’t receive its legally required notice of the November 11, 2022 date. However, FTX attorneys argued — and prevailed in this argument — that the bitcoin miner was fully aware of FTX’s petition to use that date. The US Bankruptcy Court judge ruled that “there was no evidence supporting the excusable neglect,” as alleged by NuGenesis.
On January 31, Delaware’s US Bankruptcy Court ruled that FTX’s bankruptcy estate may repay customers based on bitcoin’s price on November 11, 2022: $16,871. With FTX’s bankruptcy estate still holding onto customers’ bitcoin that is now worth quadruple that figure ($68,100 as of press time), it is easy to see how FTX can claim to be repaying nearly all customers ‘in full.’
Read more: FTX customers to be repaid at $16,871 bitcoin prices
Full USD but 1/4th the bitcoin to FTX customers
Ironically, while boasting that it will repay customers ‘in full’ despite only giving them roughly one-quarter of their actual bitcoin back, FTX bankruptcy lawyers and other experts have earned over $320 million in fees over the last 15 months.
According to this bankruptcy technicality, customers will only receive the USD equivalent value of their crypto holdings plus nominal USD interest as of the November 2022 bankruptcy petition date when one bitcoin was worth just $16,871.
The math for most other crypto assets is similarly disappointing. Ether has trebled since the bankruptcy, Dogecoin has doubled, XRP is up 50%, and Solana is up 10X. Customers holding any crypto asset will only receive repayment based on its USD value on November 11, 2022.
Although the judge admitted that other victims might have the right to challenge the $16,871 bitcoin price, this particular miner has lost its request to vacate that ruling. With several months already elapsed since the bankruptcy court set that price and no meaningful challengers able to raise it, it’s looking increasingly likely that FTX’s victims will only be receiving roughly one-quarter of their bitcoin back as of today’s much higher bitcoin price.
Somewhat embarrassingly, that is ‘full’ repayment, according to this bankruptcy proceeding.
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