U.S. Justice Department Reevaluating Payments for Digital Asset Victims

The U.S. Department of Justice (DOJ) is reviewing existing regulations concerning the return of digital assets to victims who have been defrauded or stolen from, following high-profile bankruptcies like FTX. The DOJ’s decision comes in response to criticisms about fixed-date payment methods for these cases. These payments are currently based on the market value of assets at the time of loss, but face scrutiny due to the highly volatile nature of cryptocurrency markets. Victims often find themselves compensated based on lower prices from earlier periods, potentially missing out on significant gains during later price surges. For example, FTX bankruptcy saw victims lose assets that appreciated significantly over time, while receiving compensation determined by previous, lower values. This has led many to argue for more discretion in these matters, as some may miss out on substantial profits, leading to dissatisfaction among the affected individuals. 2023’s strong market rally created new challenges, with many FTX victims demanding the return of their cryptocurrencies in kind. However, this approach also poses risks due to extreme price fluctuations in the cryptocurrency market. The DOJ and legal experts are exploring potential changes in order to address these issues.