FTX creditors are poised to recover only a fraction of their digital assets despite official promises of nearly full compensation in fiat currency, according to a prominent activist representing those affected by the cryptocurrency exchange’s collapse.
Sunil Kavuri, a vocal advocate for FTX users, estimates the actual recovery in cryptocurrency terms could be as low as 9%. This starkly contrasts with the bankruptcy plan’s pledge to reimburse creditors up to 143% of their claims in U.S. dollars.
The core issue lies in how the bankruptcy estate values the seized digital assets. Reimbursable amounts are calculated based on cryptocurrency prices at the time of FTX’s collapse in November 2022, not their current, significantly higher market values.
Kavuri shared his calculations on X on Sunday, challenging the bankruptcy plan’s optimistic narrative. He stated, “FTX creditors are not whole.”
FTX Bankruptcy recovery rates in real crypto terms
FTX creditors are not whole
9% to 46%: Real crypto terms recovery but probably in reality lower as crypto prices higher when 143% paid
Also seen on Crypto Twitter some:
1) Protect known scammers/liars/fraudsters
2) Attack those helping… pic.twitter.com/pUcjIPFsnv— Sunil (FTX Creditor Champion) (@sunil_trades) October 21, 2024
His estimates suggest a 100% fiat reimbursement would equate to only 15% of lost Bitcoin (BTC), 32% of Ethereum (ETH), and 9% of Solana (SOL). If the promised 143% in fiat is achieved, these figures would increase slightly to 22% for BTC, 46% for ETH, and 12% for SOL. Kavuri warns these percentages could decrease further if crypto prices continue their upward trend by the anticipated payment date in January 2026.
This discrepancy is significant. For example, Bitcoin was valued at approximately $16,871 USD at the time of FTX’s bankruptcy. It has since traded above $110,000 USD, with peaks reported last month exceeding $126,000 USD.
The bankruptcy plan values FTX’s cryptocurrency holdings at $16 billion USD. However, under current market conditions, Kavuri argues these same holdings could be worth only $4-5 billion USD in real terms for creditors.
The FTX reorganization plan was approved by a U.S. federal judge in October 2023. It aims to distribute between $13.39 billion and $15.03 billion USD to creditors, covering most claimed losses plus interest. The plan anticipated that 98% of creditors would receive approximately 119% of their claimed money.
Implementation of the plan began in January of this year. Approximately $7.8 billion USD has been distributed so far, including disbursements in February, May, and a $1.6 billion USD distribution that started September 30.
Many creditors, who collectively lost fortunes in the November 2022 scandal that led to founder Sam Bankman-Fried’s 25-year prison sentence, feel the promised “recovery” is an illusion. They argue that receiving dollars instead of their original cryptocurrencies results in a significant loss of real value.
Kavuri, who has been featured in major financial news outlets, also criticizes what he sees as efforts to protect “known scammers” within the crypto ecosystem. He advocates for “extra recovery” opportunities outside the formal legal process, such as token airdrops from new platforms to affected users.
He urges investors to diversify their holdings and avoid unregulated exchanges. Kavuri stresses that the primary lesson from FTX’s collapse is the importance of self-custody for digital assets.