By
Chimamanda U. Martha
April 19th, 2024
As per reports, public bankruptcy markets are currently valuing distressed FTX assets at around $0.16 on the dollar.
In an interesting development, the FTX bankruptcy claims are up for sale in private over-the-counter (OTC) markets. Sources familiar with the matter said that distressed fund assets can pick up these claims.
FTX Bankruptcy Case
Crypto exchange FTX filed for bankruptcy last year in November 2022, after its sister firm Alameda Research blew up entirely due to leverage positions. Currently, FTX and its disgraced founder Sam Bankman-Fried owe $3.1 billion to the top 50 creditors.
As per reports, public bankruptcy markets are currently valuing distressed FTX assets at around $0.16 on the dollar. Similarly, individual claims of up to $27 million are being sold on the XClaim bankruptcy marketplace.
Speaking to crypto publication CoinDesk, an anonymous FTX creditor said that private OTC markets are showing similar pricing. Here, the distressed asset funds are buying in the range of 15 to 20 cents on the dollar. The FTX creditor further suggested:
“They are buying on the projection that they will only get money in five years”. If the funds end up getting 25% in five years, it won’t be a great trade as that’s only about a 5% annual return. “I think a lot of these firms are projecting around 50 cents on the dollar recovery.”
The source also said that the deals are mostly private and not all claims are “fungible”. Also, the “quality” of the claim plays a role in the sale value. Adding further, the source said: “As the FTX website is currently down, it is very hard for people to prove the assets people had on the exchange. There may also be a clawback period for those who tried to withdraw leading up to the bankruptcy, so the quality of claims is important.”
FTX Japan Resumes Customer Withdrawals
In another development, FTX Japan Unit said that it will resume customer withdrawals starting today. This makes FTX Japan the first among FTX’s group of businesses to return money to the clients. In an email to Bloomberg, FTX Japan spokesperson Mark Botnick said:
Bankman-Fried is “happy to see that the Japanese exchange is moving forward, and continues to maintain that the US entity can and should do the same as soon as possible.”
This resumption in withdrawal also marks a victory for Japan’s financial regulator which has been acting quickly on several accounts to protect the consumers.
Note that if a large number of requests flow up from Japanese customers, FTX Japan might require time to process withdrawals. Clients might as well pull their assets from the platform dubbed Liquid.