The market for FTX creditor claims has surged, with reports indicating that certain shares are now selling at over 50 cents on the dollar. Thomas Braziel, a partner at 117 Partners, an expert firm in crypto bankruptcy claims, revealed this information.
On October 20, a recent auction sold a claim worth over $20 million for a remarkably low 52-53 cent price. It’s important to note that such prices are typically reserved for the best suits, indicating exceptional value.
The market has recently strengthened for smaller insurance claims. Claims exceeding $500,000 and reaching up to $800,000 or more are now in demand.
These particular claims are currently being traded at prices ranging from 30 to 40 cents on the dollar. The speaker emphasized that only the most reputable shares, accompanied by suitable buyers, can be sold at such rates.
The value of creditor claims has increased due to recent efforts to recover funds from the bankrupt crypto exchange. Additionally, there have been capital-raising endeavors by a company in which the exchange had previously invested.
In April 2022, Sam Bankman-Fried, the former CEO of defunct FTX, led a successful Series B funding round, securing $580 million for Anthropic.
On September 25, Amazon announced a $4 billion investment in Anthropic. Anthropic seeks capital, targeting a $30 billion valuation, potentially yielding FTX’s investment in the company at $3.5-4 billion.
FTX Creditors’ Recovery Progress & Settlement Hope
On October 4, the FTX creditor coalition posted that the mentioned value fully compensates FTX creditors. Braziel acknowledged the growing enthusiasm surrounding FTX claims but expressed concerns that still require addressing. On a positive note, the increasing valuation of shares served as an encouraging sign for creditors.
Anthropic to raise from Google at 20-30B valuation, putting FTX's stake at 3-4.5B.
FTX customers now stand to be made whole. pic.twitter.com/Vy9mZc8bEl
— FTX 2.0 Coalition (@AFTXcreditor) October 3, 2023
A significant number of issues still need to be resolved. The challenges regarding KYC and AML keep arising. According to Braziel, the recent settlement and support plan declared by the ad hoc committee of non-U.S.
FTX customers on October 18 provided a substantial victory for numerous firms seeking to sell their claims. The amended support plan includes a vital component called the “shortfall claim.”
This claim allows FTX debtors to estimate that FTX.com and FTX US customers would collectively receive 90% of distributable assets. As per these estimations, the shortfall claim is approximately $8.9 billion for FTX.com and $166 million for FTX US.
Braziel explained how they faced a predicament, unable to sell goods due to unclear customer clawback handling. Trading and market-making firms find the planned support agreement and draft outline invaluable for facilitating their claims’ sales.
FTX, under CEO John Ray III, has been strategically reorganizing since filing Chapter 11 on November 11, 2022. These initiatives aim to reclaim lost assets by selling FTX holdings and executing significant clawbacks from other crypto entities and former FTX seigniorage.