The draft FTX bankruptcy plan is being lauded for paying out more—in dollar terms—to creditors than expected. But it’s at the cost of customers who hold the most valuable assets on the exchange.

Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Overcast, Podcast Addict, Pocket Casts, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform.

Thomas Braziel, managing partner at 117 Partners, dives into the draft FTX bankruptcy plan, which was praised for paying out at more than 100% in dollar terms, but has several intricacies that are drawing criticisms from creditors—including a group that is urging creditors to vote not.

The episode delves into the nuances of the proposed payout, explaining how the estate was able to pay back more than 100% of the dollar value of the claims, why some creditors are being pitted against each other, and why it might get approved even “over the kicking and screaming” of some creditors.

Braziel gives his insights into the rapid formation of this plan, the controversial role of Sullivan and Cromwell, and the logistical challenges posed by what may end up being paper check payouts.

Show highlights:

Why the plan that was filed this week is such big news
How it was never even possible for creditors to be made whole in crypto asset terms
How the majority of depositors had stablecoins on the FTX platform
Why there are “inter-creditor” disputes
What a "cramdown" is and why it's significant in this case
Criticisms of the plan, and why larger investors, especially with crypto holdings, are having their gains socialized
Whether the FTX estate made mistakes by selling some of its positions before they 10x’ed
Why FTX didn't reboot its platform
What conflicts of interest might arise from law firm Sullivan and Cromwell
The tax implications for creditors who are non-US taxpayers
How the claims are going to be distributed
Whether the creditors will favor the proposal and the next steps

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Links |

Previous coverage on Unchained of the FTX bankruptcy:
Jesse Powell and Kevin Zhou on How FTX and Alameda Lost $10 Billion
Did the Bahamian Government Direct SBF and Gary Wang to Hack FTX?
The Chopping Block: Why Lenders Didn’t Liquidate Alameda When It Was Underwater
Erik Voorhees and Cobie on Why FTX Loaned Out Customers’ Assets
The Chopping Block: FTX: The Biggest Collapse in the History of Crypto?

Creditors plan:

Unchained: 98% of FTX Creditors to Receive 118% Claims Payout
Thomas’ summary of the plan

Dollarization:

Unchained: Is it Fair That Crypto Bankruptcies Are Denominated in Dollars? Here’s a Solution to Dollarization

Criticism of the plan:

Nicholas Hall’s thread
Sunil Kavuri’s opinion on X
Zach Guzman on the sale of Anthropic

Taxes:

Thomas’ thread on the taxes for creditors

Unchained Podcast is Produced by Laura Shin Media, LLC. Distributed by CoinDesk. Senior Producer is Michele Musso and Executive Producer is Jared Schwartz.

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