April 19, 2024
FTX Creditor Claims Surpass 50c as Hope Emerges for Buyers
Latest Cryptocurrency News

FTX Creditor Claims Surpass 50c as Hope Emerges for Buyers

The market for FTX creditor claims has been gaining momentum, with reports of claims selling for over 50 cents on the dollar, as mentioned by Thomas Braziel, a partner at 117 Partners, a firm specializing in crypto bankruptcy claims.

Braziel revealed that a creditor claim exceeding $20 million recently fetched between 52 and 53 cents at auction on October 20. However, he emphasized that only the strongest claims tend to command these prices, stating, “The market has really firmed up for smaller claims, with smaller claims being north of $500,000 to $800,000 and up. Those claims are now trading between the high-end of 30 cents and the lower end of 40 cents.”

This surge in the value of creditor claims appears to be influenced by recent efforts to recover assets from the bankrupt crypto exchange and fundraising activities related to a company in which the exchange had invested.

In April 2022, Anthropic secured $580 million in a Series B funding round led by Sam Bankman-Fried, the former CEO of FTX. On September 25, Amazon announced a $4 billion investment in Anthropic, potentially valuing the company at $30 billion, making FTX’s investment in it worth between $3.5 billion and $4 billion.

According to an October 4 post from the FTX creditor coalition, this valuation could potentially make FTX creditors whole. While there is growing enthusiasm for FTX claims, Braziel noted that there are still concerns, such as KYC and AML issues, that need to be addressed. Nevertheless, the increasing valuation of claims is seen as a positive sign for creditors.

Braziel highlighted the significance of the settlement and plan support announced by the ad hoc committee of non-U.S. FTX customers on October 18, particularly the “shortfall claim.” This claim estimates that customers of FTX.com and FTX US would collectively receive 90% of distributable assets, with an estimated shortfall claim of approximately $8.9 billion for FTX.com and $166 million for FTX US. This development is expected to aid firms looking to sell their claims in the market.

Since FTX filed for Chapter 11 bankruptcy protection in November 2022, the FTX Debtors’ estate, led by new CEO John Ray III, has taken various actions to recover lost assets. These actions include selling FTX holdings and recovering assets through clawbacks from other crypto firms and former FTX seigniorage.

Image by pressfoto on Freepik

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