FTX, the crypto exchange that faced a tumultuous collapse in 2022, has unveiled a new proposal aimed at repaying creditors and compensating them for their losses. The plan, announced on May 7, promises to repay all creditor claims in addition to offering "billions in compensation for the time value of their investments." However, despite the substantial offer, some critics argue that the proposal still falls short of providing fair compensation.

According to FTX's statement, creditors with claims below $50,000 will be eligible for a 118% recovery, encompassing approximately 98% of FTX's creditors by number. While this may seem like a significant step towards restitution, some creditors are dissatisfied with the plan's approach. One contentious issue is the reimbursement of assets based on their value at the time of FTX's bankruptcy in November 2022, rather than current market prices. Given the substantial increase in crypto asset values since then, this approach has sparked criticism from some stakeholders.

John J. Ray III, CEO and chief restructuring officer of FTX, expressed optimism about the proposed Chapter 11 plan, highlighting the intention to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors. The estimated total value to be distributed to creditors ranges between $14.5 and $16.3 billion, offering a significant potential recovery for those impacted by the exchange's collapse.

Despite the promising figures, industry pundits like Mike Belshe, CEO of BitGo, remain skeptical. Belshe voiced concerns on X, asserting that while he understands the constraints of the bankruptcy process, the proposed plan does not fully address the losses suffered by victims. This sentiment reflects broader skepticism within the crypto community regarding the adequacy of FTX's compensation efforts.

FTX's collapse in November 2022 revealed an $8 billion hole, prompting efforts by its new management to recover funds and address creditor claims. These efforts included a substantial $884 million sale of shares in AI firm Anthropic in March, representing a significant portion of FTX's stake in the company. However, despite these endeavors, the proposed restructuring plans do not include a revival of the FTX exchange itself, once a prominent player in the crypto market.

As FTX navigates the complexities of bankruptcy proceedings and strives to compensate creditors, the proposed plan continues to face scrutiny from stakeholders. The extent to which it adequately addresses the losses incurred by victims remains a subject of debate within the crypto community.