Former FTX Client Committee Member Urges Clients to Vote Against Proposed Refund Plan
Arush Sehgal, a former member of the bankrupt FTX cryptocurrency exchange creditor committee, is urging company clients to vote against the proposed refund plan. FTX CEO John Ray III introduced a bankruptcy plan in early May that includes payments to traders ranging from $14.5 billion to $16.3 billion. Under this plan, users who have filed claims to recover assets worth up to $50,000 may receive about 118% of the debt amount.
Sehgal, who recently led the newly established FTX Client Committee, believes that this plan is unfair. The committee, consisting of 1,688 members demanding over $1 billion in refunds, opposes the proposed plan, as they believe it will lead to significant losses for the exchange’s creditors.
One of the main grievances is that after the $477 million digital assets theft from FTX in November 2022, the company’s management decided to compensate in fiat currency rather than in the stolen cryptocurrencies. Since the value of these stolen assets has increased significantly, users will only receive a portion of the amount they were supposed to be returned.
In order to defend their rights, the law firm McCarter & English, representing the interests of the FTX Client Committee, has filed a lawsuit seeking to recognize traders’ assets as their personal property, not the property of the trading platform. The final decision on the FTX bankruptcy planning and refund will be based on the results of the exchange’s clients’ vote, which will take place after Judge John Dorsey approves the initiative.
