A report from digital assets platform Matrixport has highlighted the surge in the market value of bankruptcy claims against the crypto exchange FTX, which has tripled this year and is coinciding with its impending litigation. With an estimated $200 million in legal fees, the bankruptcy debacle of FTX has surely been a spectacle. Once labelled a high-risk asset, these bankruptcy claims are now a coveted asset for investors with an interest in distressed assets.
Rewinding to 2022, FTX filed for Chapter 11 bankruptcy, resulting in a web of complications that made it one of the most complex cases in the history of U.S bankruptcy. However, things have taken a twist since then. The projected payout for FTX creditors has leapfrogged from 10 cents on the dollar at the year’s start, to an average of 37 cents now. This, in part, could be attributed to the ceaseless efforts of John Ray III, a seasoned Wall Street bankruptcy attorney, under whose guidance FTX managed to recover $7.3 billion in assets, comprising crypto, cash, and real estate.
Lending additional buoyancy to the cause, is FTX’s $500 million interest in Anthropic, an AI start-up that FTX acquired using customer resources, placing it within the scope of creditor claims. With Amazon manifesting intentions of a possible $4 billion investment in Anthropic, the worth of these claims could skyrocket even further.
In this ambiance of actions and reactions, the possibility of FTX 2.0, a potential relaunch of the beleaguered exchange, could instill additional vitality in the claims market. A successful revival could provide the creditors an opportunity to savor the taste of equity ownership, adding an extra layer of value to their claims.
The intensified competition among claims buyers was ignited further when the court recently reported about the recovered assets of $7.3 billion. Nevertheless, Brian Ferrara, the director of Cherokee Acquisition’s Claims Market, and Markus Thielen, Matrixport’s head of research and strategy, caution that the actual price of a claim might waver based on several factors such as jurisdiction and the claim size.
FTX’s bankruptcy case, formerly viewed as a sinkhole of legal intricacies and risks, has surprisingly transpired into an unexpected beacon of opportunity in the distressed assets market. This phenomenon has showcased not only the changed perception regarding FTX’s bankruptcy claims, but also the volatile nature of value in this industry. The benchmarks of evaluation that were considered conventional yesterday can easily be toppled today by new asset recoveries, strategic investments, or an insinuation of a prosperous relaunch.
Source: Cryptonews
