FTX Lawyers Challenge Disclosure Plan

FTX Class action lawyers, Moskowitz Law Firm and Boies Schiller Flexner LLP, representing thousands of plaintiffs in the multi-district litigation against FTX, have objected to the proposed disclosure plan for FTX Trading Ltd. and its affiliates.

According to a recent tweet from the lawyers, the recovery figures need to be more accurate and account for the increase in cryptocurrency values since the Petition Date, thus not satisfying the complete disclosure requirements mandated by Bankruptcy Code 1125.

FTX Class Action lawyers Moskowitz and David Boies
have filed an objection to the disclosure statement/plan pic.twitter.com/cTI6ntZqpQ

— Sunil (FTX Creditor Champion) (@sunil_trades) June 6, 2024

Plaintiffs Challenge FTX Reorganization Plan; Citing Misleading Recovery Figures

Moskowitz Law Firm and Boies Schiller Flexner LLP claim the FTX plan’s promise of a “full recovery” is deceptive. The plan proposes returning 129% of customers’ cryptocurrency account values as of the Petition Date, when Bitcoin was valued at around $17,000, compared to its current value of $70,000. This means customers would not receive the actual value of their losses.

The MDL Plaintiffs argue their litigation offers a better path for full economic recovery by targeting non-debtor defendants under different legal theories. They dispute the plan’s Anti-Double-Dip Provision, which implies that any recovery from the MDL would duplicate the reorganization plan’s recovery. The plaintiffs contend that MDL claims are against non-debtor entities for different legal violations and do not duplicate recoveries under the plan.

The objection calls for the Disclosure Statement to clarify whether the Anti-Double-Dip Provision precludes further recoveries. Additionally, the MDL Plaintiffs criticize the debtors for not including Robert J. Cleary’s Examiner Report findings in the Disclosure Statement.

This report identifies potential causes of action and unresolved issues crucial for creditors. The objection demands transparency regarding how these findings impact the reorganization plan.

Sinohope Recovers 108% of FTX Deposits

Sinohope, which had $18.1 million in deposits on FTX when it collapsed in November 2022, has recovered 108% for its assets through a recent deal.

Additionally, in a recent auction from the FTX bankruptcy estate, Pantera Capital successfully bid on a new batch of Solana (SOL) tokens, securing 2,000 tokens at a discounted price. The cryptocurrency investment firm remains actively involved in the ongoing liquidation process of the defunct exchange FTX.