Former FTX exec files lawsuit as exchange announces reorganization gains support News ▸ US ▸ FTX ▸ Bankruptcy
Former FTX exec files lawsuit as exchange announces reorganization gains support
FTX reorganization plan appears poised for success despite criticisms over asset valuation.
2 min read
Updated: Aug. 22, 2024 at 10:38 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bankrupt crypto exchange FTX announced on Aug. 21 that its reorganization plan has garnered strong preliminary support from creditors.
According to FTX, over 95% of creditors have endorsed the plan, representing 99% of the claims by value. This broad backing indicates widespread consensus among FTX creditors.
FTX CEO John J. Ray III emphasized the significance of this support, noting that it highlights the plan’s approval within the community. He stated:
“Importantly, the Plan’s innovative structure provides for the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors and resolves complex disputes with dozens of governmental and private stakeholders.”
Despite this support, some critics argue that FTX’s approach disadvantages creditors by valuing assets based on their November 2022 prices—when the firm declared bankruptcy—instead of current market values.
Nevertheless, FTX expressed confidence that the overwhelming support will ensure the plan exceeds the acceptance thresholds required under the Bankruptcy Code.
FTX plans to file the final voting results with the US Bankruptcy Court for the District of Delaware before the Confirmation Hearing, scheduled for Oct. 7, 2024.
Former FTX exec petitions US
The community backing for the FTX plan comes as a former executive of the exchange, Ryan Salame, files action against the US government.
On Aug. 21, Salame alleged that the US government reneged on their promise not to pursue campaign finance charges against his partner, Michelle Bond, which was a key element of his plea deal.
On social media platform X, he stated that his lawsuit was to “tell the truth and expose un-American tactics.” He added:
“It’s all true but I just made a court filing I’m pretty nervous about because I know it means the most powerful body in the world is going to come at me and my loved ones again, but I’m hoping it encourages more people to be honest and tell the truth and expose un-American tactics.”
Salame, along with other former FTX executives, including Alameda CEO Caroline Ellison, Nishad Singh, and Gary Wang, had pleaded guilty to several crimes related to their roles at the defunct exchange.
Salame was to begin serving a 7.5-year prison sentence on Oct. 13. He had also been ordered to pay over $6 million in forfeiture and more than $5 million in restitution.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.
Ryan Salame is the former co-CEO at FTX Digital Markets (FDM), the Bahamian subsidiary of FTX Trading Limited.
John J Ray III is the Chief Restructuring Officer and now-appointed CEO of FTX, a cryptocurrency derivatives exchange.