Claims related to the bankrupt crypto exchange FTX have witnessed a remarkable surge, with their prices exceeding 100 cents on the dollar.
Claims related to the bankrupt crypto exchange FTX have witnessed a remarkable surge, with their prices exceeding 100 cents on the dollar. The estate's draft recovery plan, which projects a recovery rate of 118% for most creditors, has sparked renewed investor interest in FTX claims, which are now being traded between 101% and 112% of their face value.
Louis Origny, the CTO of claim buyer FTXCreditor, which has already acquired over 2,100 claims, anticipates a surge in claim buying activities. Origny cited two reasons for this anticipation: the disclosure statement's mention of a potential 30% tax withholding rate for non-U.S. customers, which could drive holders to sell their claims on the secondary market, and the inability of all claim holders to cash USD checks.
Distressed asset investors hold a significant portion of the claims, and since a large percentage of claims are in stablecoins, it is unlikely that there will be significant opposition to the proposed plan. Thomas Braziel, a partner at 117 Partners and 507 Capital, suggested that this situation undermines the efforts of those seeking crypto upside, as the plan favors payouts in dollars over cryptocurrencies.
He also expressed astonishment at the skyrocketing prices, comparing them to the recovery rate of Lehman at 141 cents on the dollar, which took a decade to achieve. Braziel noted that even small claims are pricing close to 100 cents on the dollar.
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