Should FTX users be viewed as creditors or asset owners? The answer could mean the difference between recovering funds or getting short-changed.

• Some FTX customers with funds trapped on the exchange want to be viewed as asset owners, the Financial Times reported.
• Lawyers plan to argue that the funds still held by FTX are "custody" assets that are owned by the users and should be repaid faster.

A group of FTX customers who have $1.6 billion trapped on the bankrupt exchange want to be considered asset owners instead of unsecured creditors, according to the Financial Times.

Lawyers plan to argue that the funds still held by FTX are "custody" assets that are owned by the users and should be repaid faster, the report said.

Otherwise, being viewed as unsecured creditors could mean waiting longer and only getting a small fraction of their money back.

Classifying some of the funds as assets has some precedent, as a judge presiding over the bankruptcy of Celsius Network earlier this month decided that a small portion of the users in that case should be repaid assets that were not mixed with other moneys at the firm, the FT said.

FTX must sort through up to 1 million creditors, including customers, suppliers and lenders who are vying to prove that they deserve to be repaid before others.

Determining who gets priority during bankruptcy proceedings will be key as FTX faces a wide shortfall between what it has and what it owes.

FTX's new management, led by John Ray III, has found over $1 billion in assets and $1.2 billion in cash versus liabilities of roughly $10 billion.

As it stands, customer funds still on the exchange are rolled into the lengthy bankruptcy proceeding, which involves tracing funds and locating accounts before the funds can be repaid.

Meanwhile, some FTX users may choose not to wait to see what happens. Big players in distressed investing are eyeing the claims of FTX customers whose assets are stuck on the bankrupt crypto exchange, sources told Bloomberg.

Top names like Baupost Group and Oaktree Capital Management are among those that have expressed interest, according to the report, potentially setting up risky bets that they will eventually get paid in bankruptcy proceedings.

Valuations have hovered between 5 and 13 cents on the dollar, and customers must decide whether to get limited cash now or hold out for something better in the future, which isn't a sure thing.