Claims from FTX creditors surpass the 50 cent threshold as purchasers perceive hope for the future.

“The FTX market is experiencing a warming trend in response to the claims made, where at recent auctions, claims have been trading between 52 to 53 cents on the dollar. These claims have been heating up the FTX creditor market, and reports indicate that certain claims are now fetching prices exceeding the 50-cent mark for each dollar owed. As Thomas Braziel, a partner at 117 Partners, a firm specializing in cryptocurrency bankruptcy claims, shared, a claim with a valuation exceeding $20 million recently found a buyer willing to pay between 52 and 53 cents at an auction held on the 20th of October. However, it’s essential to note that these premium prices are typically reserved for claims of the highest quality. Mr. Braziel emphasizes, ‘The market has experienced a significant upturn for smaller claims in the range of $500,000 to $800,000 or more.’ He further iterates that these claims are now trading in the range of 30 to 40 cents per dollar, provided they meet the stringent criteria of being the ‘cleanest’ claims with the right buyer. This surge in the valuation of creditor claims appears to be a direct result of recent clawback endeavors by the now-bankrupt crypto exchange, coupled with capital-raising efforts by a company that had previously received investments from FTX.

In April 2022, Anthropic embarked on a Series B funding round and successfully secured $580 million, with Sam Bankman-Fried, the former CEO of the now-defunct FTX, leading the way. Then, on September 25, Amazon made a groundbreaking announcement by pledging a $4 billion investment in Anthropic. Anthropic is currently in the pursuit of capital, with a potential valuation of $30 billion, making FTX’s initial investment in the company worth an estimated $3.5 billion to $4 billion. According to a post from the FTX creditor coalition on October 4, this valuation has the potential to bring relief to FTX creditors. Despite the growing optimism surrounding FTX claims, Mr. Braziel has raised some valid concerns that still require attention. However, the overall trend of increasing claim valuations bodes well for creditors, who have been eager to see their investments gain traction.

As Mr. Braziel aptly notes, ‘There’s still much to be resolved, with KYC and AML issues surfacing.’ He emphasizes that the recent settlement and plan support announcement by the ad hoc committee of non-U.S. FTX customers on October 18 represents a significant victory for several firms keen on selling their claims in the market. A pivotal component of the amended support plan is the ‘shortfall claim,’ wherein FTX debtors project that customers of FTX.com and FTX US will collectively receive 90% of distributable assets. The shortfall claim amounts to approximately $8.9 billion for FTX.com and $166 million for FTX US. Mr. Braziel elaborates on the significance of this development, stating, ‘Many were in a difficult position with claims they couldn’t sell due to the uncertainty surrounding customer clawbacks. The planned support agreement and draft outline are especially beneficial for trading firms looking to sell their claims.’ Since FTX initially filed for Chapter 11 bankruptcy protection on November 11, 2022, the FTX Debtors’ estate, now under the leadership of CEO John Ray III, has undertaken a series of strategic moves aimed at recovering lost assets. These efforts include the sale of FTX holdings, substantial clawbacks from other crypto firms, and the reclamation of former FTX seigniorage.”