A recent revision in the bankruptcy proceedings of FTX has stirred debate with FTX's disclosure of an updated proposal featuring an exonerative clause. This clause, uncovered in FTX's revised scheme unveiled on May 7, has caught the attention and criticism of individuals within the digital currency community.

The altered plan by FTX, revealed on May 7, brings about notable changes to the repayment approach for creditors. Noteworthy in the proposal is the pledge of substantial compensation and an 11% reimbursement to more than 98% of creditors. However, the crux of contention orbits around the exonerative clause embedded within the blueprint.

The inclusion of the exonerative clause has sparked disapproval from creditors, particularly the FTX Customer Ad-Hoc Committee, representing a group of over 1,500 creditors. Sunil, a member of the committee, raised apprehensions regarding potential misconduct by Sullivan & Cromwell (S&C), pointing out asset sales at considerable markdowns and the failure to relaunch FTX 2.0.

Amidst this, Sullivan & Cromwell, a law firm with a century-old legacy overseeing FTX's bankruptcy proceedings, faces accusations of reaping benefits from FTX's purported multibillion-dollar deception. It came to light that FTX owed as much as $1.45 billion in bankruptcy fees to the S&C law firm, as per compensation declarations from December 2023.

On another front, creditors have expressed worries about S&C’s involvement and the likelihood of a conflict of interest, considering its historical connections with FTX and engagement in numerous critical deals. The updated proposal by FTX has stirred skepticism and discontent among creditors and industry experts. Pseudonymous FTX creditor Rob, who also heads growth at Paradex, vehemently opposed the proposal, citing concerns regarding accountability and fairness.

The sentiments shared by creditors mirror wider apprehensions concerning the suggested compensation structure and the exonerative clause. With the destiny of FTX's revised plan hanging in the balance, stakeholders are anticipating the outcome of the forthcoming creditor ballot. The decision to accept or decline the proposal could profoundly influence the trajectory of the bankruptcy procedures, setting the tone for the future.