An upswing in a claim’s valuation signals an increase in the anticipated recovery worth. SBF’s inner circle – Caroline Ellison, Gary Wang, and Nishad Singh – might have to pay heavy penalties.
On Thursday, November 2, the US court finally convicted FTX co-founder Sam Bankman-Fried of seven criminal charges. The sentencing will take place next year around March 2024. Interestingly, amid this development, FTX‘s claim price also surged by a staggering 57%. Fundamentally, a claim signifies an entitlement to a specific sum of money. When businesses encounter financial challenges or bankruptcy, creditors assert their claims, aiming to regain some of their investment.
Amid the uncertainty, opportunities emerge as investors frequently exchange these claims, guided by their assessments of the eventual recovery sum. An upswing in a claim’s valuation signals an increase in the anticipated recovery worth. Popular crypto analyst Colin Wu also stated how the claims for other bankrupt crypto firms like Celsius and Genesis, have shot up.
According to Claims Market, the current claim pricing of FTX has reached a maximum of 57%, Celsius is about 35-40%, Genesis is about 50%, Alameda is 10%-15%, and 3AC is only 7% to 9%. . The increase in FTX’s claim pricing may be related to the skyrocketing valuation of the AI… pic.twitter.com/orISQejSKm
— Wu Blockchain (@WuBlockchain) November 3, 2023
The unexpected surge in the pricing of FTX’s claims may be attributed to its early and successful investments in AI startups. As the valuations of these AI companies experienced remarkable growth, the potential recovery value for FTX claim holders also increased substantially. Essentially, thanks to FTX’s proactive investments in these promising startups, claimants now have the opportunity to receive a significantly larger sum than initially projected.
To illustrate, consider a claim initially valued at $1,000 with an anticipated recovery of 40%, amounting to $400. However, owing to FTX’s prosperous investments in AI firms, the projected recovery has now climbed to 57%, translating to $570 – a noteworthy increase of $170, solely driven by the company’s successful ventures in this sector.
Sequoia Partner Lashes Out at SBF
Soon after the court verdict on SBF, other financial industry players have come lashing out at the disgraced FTX founder. Sequoia partner Alfred Lin stated that the rapid and unanimous verdict today reaffirms what they had previously suspected: that SBF misled and deceived numerous individuals, including customers, employees, business partners, investors, such as myself and Sequoia.
Following the collapse of FTX, Sequoia diligently examined and conducted due diligence procedures and assessed its 18-month partnership with SBF. Their assessment resulted in the conclusion that they had intentionally received false information and untruths.
Throughout the past year, Sequoia had to maintain its silence while the prosecution prepared its case and during the trial, noted Alfred. They express relief that the trial has now concluded.