FTX customers are strongly opposing the cryptocurrency exchange’s bankruptcy plan, arguing that it unlawfully uses their assets to pay off third-party creditors, including the U.S. government.
This controversy centres on the legal interpretation of asset ownership and customer rights.
The FTX Customers Ad Hoc Committee is leading the charge, asserting that their digital assets were never transferred to FTX’s ownership.
This stance contrasts with the situation at another bankrupt crypto firm, Celsius, where customers’ assets were legally considered part of the platform’s estate.
On June 19, a committee representative emphasized that FTX’s terms of service differ significantly from Celsius’s.
They argue that, since FTX customers retained ownership of their assets, these should be returned directly to them rather than being converted into cash for debt repayment.
The crux of the dispute lies in the proposed method of compensating creditors.
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.
This approach, he argues, 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.
