FTX
US: FTX users challenge plan to use their assets for debt repayment
FTX customers are up in arms in the United States against the cryptocurrency exchange’s bankruptcy plan.
The customers described that the plan unlawfully uses their assets to pay off third-party creditors, including the U.S. government.
The argument centres on the legal interpretation of asset ownership and customer rights, as FTX Customers Ad Hoc Committee leads the charge.
They insisted that their digital assets were never transferred to FTX’s ownership, a position which the say contrasts with the situation at another bankrupt crypto firm, Celsius, where customers’ assets were legally considered part of the platform’s estate.
Specifically, on June 19, a committee representative said that FTX’s terms of service differ significantly from Celsius’s.
According to them, since FTX customers retained ownership of their assets, these should be returned directly to them rather than being converted into cash for debt repayment.
Indeed, FTX’s plan to liquidate cryptocurrencies into cash for repayment is being contested by the committee, which insists on a direct return of the digital assets to their rightful owners.
Sunil Kavuri, a board member of the committee, criticized FTX’s strategy of using customer assets to settle fines and other financial obligations.
He said this approach is unfair and legally questionable.
A court hearing on June 25 will address these issues, potentially setting a precedent in cryptocurrency bankruptcy law.
The outcome of this legal battle could significantly impact how customer rights are handled in future crypto exchange failures.
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