FTX Creditors Stir Market as Court Hearing Approaches; Claim Prices Surge Amid Repayment Hopes
Summary:
Anticipating a favorable ruling at a January 25 estimation hearing, FTX creditors have caused a significant rise in the cost of claims on the FTX crypto exchange. Cherokee Acquisition observed these claims trading at almost 80 cents on the dollar. FTX plans to seek court's approval for its proposed repayment plan based on the crypto prices on the day of bankruptcy, while creditors prefer "in-kind" repayments. Claim values have surged, indicating growing creditors' confidence. Simultaneously, over 100 objection letters were filed globally against the Debtors' motion to estimate claims. FTX also reportedly had $3.1 billion in debt to its top 50 creditors alone.
Ahead of a January 25 estimations hearing, creditors are hopeful for a favorable ruling regarding their request for crypto repayments "in-kind," causing a rise in the cost of claims on the FTX cryptocurrency exchange. Cherokee Acquisition, a firm specializing in bankruptcy claims that also provides liquidity on FTX claims, has observed these claims trading at nearly 80 cents on the dollar.
Increasing anticipation of this court hearing, expected on January 25, has led to a steady rise in prices, according to claims firm managed Twitter account, Claims Market. At this hearing, FTX plans to seek approval for their proposed cryptocurrency prices list. FTX aims to repay creditors based on the cryptocurrency price on the day of its bankruptcy, whereas creditors prefer an "in kind" payment that takes into account only the number of tokens lost without considering market prices.
Data from Cherokee Acquisition and Claims Market suggest that FTX claims for over $3 million have surged by up to 80%. Previously in November 2022, FTX claim pricing reached 57%, a rise attributed to successful investments by FTX in artificial intelligence companies. The claim value's percentage increase indicates creditors' growing confidence in receiving significant repayments. Other bankrupt crypto firms like Alameda Research, Genesis Global, and 3AC Loans have also seen substantial hikes in claims prices by about 45%, 67%, and 32% respectively.
Global retail FTX customers including those from South Korea, the United States, Canada, and the United Kingdom have reportedly submitted over a hundred protest letters against the Debtors' motion to estimate claims. An FTX creditor suggests that approximately 1 million creditors are seeking redemption due to FTX's downfall. Court records show that FTX owes $3.1 billion to its top 50 creditors, with the largest creditor owed $226 million.
Sources indicate that the FTX and Alameda Research estate sold over two-thirds of its Grayscale Bitcoin Trust shares, raising at least $600 million. Before the conversion to a spot exchange-traded fund on January 11, the FTX estate held 22.28 million shares (valued at $902 million at the time) of the Grayscale Bitcoin Trust as per a Bloomberg report.
Published At
1/23/2024 10:03:30 AM
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