The trading prices of claims on the bankrupt cryptocurrency exchange FTX have seen a significant increase as a crucial estimation hearing approaches on January 25. This hearing is anticipated to potentially favor creditors’ demands for repayments in cryptocurrency.
According to Cherokee Acquisition, a firm specializing in bankruptcy claims and liquidity for FTX claims, FTX claims are now trading at nearly 80 cents on the dollar. The Claims Market X (formerly Twitter) account, managed by the claims firm, indicated that prices have been rising in anticipation of the upcoming court hearing. This hearing will address FTX’s proposal to establish cryptocurrency prices for repaying creditors.
FTX has suggested repaying its creditors based on cryptocurrency values as of the date of its bankruptcy filing. However, many creditors are pushing for “in-kind” payments, focusing on the quantity of lost tokens rather than their market value.
The increase in claim pricing for FTX, now up to 80%, reflects growing confidence among creditors about receiving substantial repayments. This contrasts with other bankrupt crypto companies like Alameda Research, Genesis Global, and Three Arrows Capital, where claims prices have risen to approximately 45%, 67%, and 32%, respectively.
Over 100 objection letters have been filed globally against the debtor’s motion to estimate claims, originating from countries including South Korea, the United States, Canada, and the United Kingdom. These objections primarily come from retail FTX customers. FTX reportedly has around one million creditors, with the top 50 creditors alone owed $3.1 billion. The largest single creditor claim is $226 million.
The FTX and Alameda Research estate has reportedly sold over two-thirds of its Grayscale Bitcoin Trust shares, raising at least $600 million. Before January 11, when the trust was converted into a spot exchange-traded fund, the FTX estate held 22.28 million shares of the Grayscale Bitcoin Trust, valued at $902 million at that time.
The outcome of the January 25 hearing and the ongoing developments in the FTX bankruptcy case will be closely watched, as they hold significant implications for creditors and the broader cryptocurrency market. The case continues to unfold, highlighting the complexities and risks associated with cryptocurrency investments and the importance of regulatory clarity in the digital asset space.
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