FTX's claims prices have experienced a remarkable surge, reaching almost 80 cents to the dollar, amid an anticipated hearing of a dispute between the bankrupt crypto exchange and its creditors.
According to a report by Cointelegraph, FTX is advocating for a refund process based on the market prices for November 2022, while creditors are pushing for a payment system based on the number of lost tokens, regardless of their market values.
FTX's Pricing Proposal
FTX's proposal to reimburse creditors based on cryptocurrency prices on the day of its bankruptcy has encountered opposition. This difference of perspectives has intensified ahead of the anticipated court hearing. This has resulted in FTX's claim prices skyrocketing.
Cherokee Acquisition, a prominent investment banking firm specializing in bankruptcy claims, reported the surge in FTX's claim prices. Its data reveals that claims exceeding $3 million have experienced an increase of 80%, reflecting growing confidence among creditors in receiving substantial repayments.
Claims prices increased up to 80% pic.twitter.com/Qk1beDeZFu
— FTXRELOADED (@FTXRELOADED) January 22, 2024
This surge places FTX ahead of other bankrupt crypto companies like Alameda Research, Genesis Global, and Three Arrows Capital, which have also seen significant spikes in claim prices.
FTX Faces Scrutiny
FTX's woes extend beyond the courtroom, with over 100 objection letters filed globally against the exchange's motion to estimate claims. FTX's retail customers from South Korea, the United States, Canada, and the United Kingdom have raised their concerns.
With an estimated one million creditors seeking redemption from the FTX's fallout, the stakes are high. FTX has disclosed a staggering $3.1 billion debt to its top 50 creditors alone, with the largest creditor owing $226 million.
FTX claims: prices for #FTX claims over $1mm continue to increase. Market prices as of January 12 were 72 bid, 75 ask, up 2 points from the prior week. Prices continue to increase in anticipation of the #bankruptcy Claims Estimation Hearing on January 25.… pic.twitter.com/NZiuUUVnpA
— Claims Market (@claims_market) January 17, 2024
Recently, FTXsold $1 billion worth of its shares in Grayscale Bitcoin Trust (GBTC), resulting in $2 billion worth of withdrawals by investors since GBTC was converted into an ETF.
According to a report by Finance Magnates, FTX's actions have significantly contributed to the significant outflows from GBTC. The crypto exchange leveraged the price disparity between GBTC and the underlying Bitcoins. As of October last year, FTX held 22.3 million GBTC shares valued at $597 million.
This article was written by Jared Kirui at www.financemagnates.com.
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