The market for FTX creditor claims is showing increased activity, with some claims now reportedly selling for over 50 cents on the dollar. Thomas Braziel, a partner at 117 Partners, a firm specializing in crypto bankruptcy claims, revealed that a creditor claim worth over $20 million recently sold for 52 to 53 cents at auction. Smaller claims, ranging from $500,000 to $800,000 and above, are also trading between 30 and 40 cents. The increased value of creditor claims follows clawback efforts by the bankrupt FTX crypto exchange and capital-raising efforts by a company it had invested in, Anthropic.
The market for FTX creditor claims is heating up, with some claims reportedly selling for over 50 cents on the dollar. According to Thomas Braziel, a partner at 117 Partners, a firm that specializes in crypto bankruptcy claims, a creditor claim worth over $20 million recently sold for 52 to 53 cents at auction.
The value of creditor claims appears to be on the rise, potentially due to recent clawback efforts from the bankrupt FTX crypto exchange and capital-raising efforts by a company it had previously invested in, Anthropic. In April 2022, Anthropic raised $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, with a potential valuation of $30 billion for the company. This valuation could potentially make FTX creditors whole.
Smaller claims, ranging from $500,000 to $800,000 and higher, are also trading between 30 and 40 cents. However, Braziel noted that only the cleanest claims with the right buyer are selling at these prices.
Despite the growing enthusiasm for FTX claims, there are still concerns that need to be addressed. KYC (Know Your Customer) and AML (Anti-Money Laundering) issues continue to be a consideration. Nonetheless, the increasing valuation of claims is a positive sign for creditors.
The FTX creditor coalition's recent Settlement and Plan Support, announced on October 18, was a significant win for many firms looking to sell their claims on the market. A key element of the amended support plan is the "shortfall claim," which estimates that customers of FTX.com and FTX.US would collectively receive 90% of distributable assets. The shortfall claim is estimated at approximately $8.9 billion for FTX.com and $166 million for FTX.US. This support agreement and the draft outline provide clarity and assistance for trading firms looking to sell their claims.
Since FTX filed for Chapter 11 bankruptcy protection in November 2022, the FTX Debtors' estate, led by new CEO John Ray III, has made significant moves to recover lost assets, including the sale of FTX holdings and substantial clawbacks from other crypto firms and former FTX seigniorage. This activity reflects the ongoing development and dynamics in the cryptocurrency bankruptcy space.
(TOM MITCHELHILL, COINTELEGRAPH, 2023)