FTX Creditors Lose Twice as Crypto Market Rally Erases Gains From Cash Repayments

Core Insights - Creditors of the defunct FTX exchange may only recover between 9% to 46% of their original losses due to the significant rise in digital asset prices since the exchange's collapse [1][2] - The disparity between court-approved dollar settlements and current market prices of cryptocurrencies, such as Bitcoin, has negatively impacted the recovery for creditors [2][3] Recovery Estimates - Bitcoin's value has surged from approximately $16,871 at the time of bankruptcy to over $110,000, resulting in a 143% cash recovery translating to only about 22% of the equivalent Bitcoin amount [3] - Ethereum's rebound to around $4,000 reduces the real recovery to 46%, while Solana's increase to approximately $200 cuts creditor value to about 12% [3] Creditor Community Reactions - The recalculation of recovery estimates has sparked debate among creditors, with many arguing that FTX's decision to convert claims into US dollars locked in losses at the market's lowest point [4] - Some creditors express frustration that they are being repaid less than the current value of the crypto they were originally owed due to the delay in repayments [5][6] Legal and Operational Context - Sam Bankman-Fried, the founder of FTX, has claimed that the company was never truly insolvent and suggested that earlier repayments could have allowed customers to repurchase their coins before prices surged [5] - The FTX estate has defended the conversion of claims to US dollars as a necessary action under U.S. bankruptcy law, which values claims as of the filing date to simplify the distribution process [6]