FTX bankruptcy claims are selling for as low as 16 cents on the dollar in secondary markets.
Distressed asset funds are reportedly projecting a recovery in five years.
Crypto hedge fund Galois Capital sold its claims for the bankrupt exchange for 16 cents on the dollar.
Online claims marketplaces have attracted FTX customers holding nearly $1 billion worth of claims.
FTX creditors who have funds stuck on the bankrupt crypto exchange are selling their bankruptcy claims for as low as 16 cents on the dollar in secondary markets. This includes over-the-counter (OTC) marketplace XClaim and bankruptcy claims buyers like Cherokee Acquisition.
FTX claims buyers project recovery in five years
Bankruptcy marketplace XClaims has listed millions of dollars worth of FTX bankruptcy claims on its platform. The highest claim of more than $27 million, which was listed in November last year, is currently selling for 16 cents on the dollar. Non-individual claims worth as much as $16 million attracted similar bids on the platform.
According to a report by CoinDesk, a person familiar with the matter revealed that distressed asset funds were picking up claims for the bankrupt crypto exchange, paying between 15 to 20 cents on the dollar on private OTC markets. According to the person, the sale value depends on the quality of the claim, which is determined by supporting documents like proof of claim, account statement, etc.
They are buying on the projection that they will only get money in five years. I think a lot of these firms are projecting around 50 cents on the dollar recovery.”
Galois Capital, the crypto hedge fund which became one of the most high-profile victims of FTX last year, announced earlier today that it was shutting down. Per a report by the Financial Times, Co-founder Kevin Zhou told investors that the fund had sold its bankruptcy claim for 16 cents on the dollar.
XClaims’ Chief Strategy Officer stated last month that the discount on FTX bankruptcy claims was partly due to the customers’ inability to access their trading accounts. This prevented them from providing the details needed to improve the quality of their claims. According to bankruptcy claims broker Cherokee Acquisition, the considerable discount has not deterred affected users from selling their claims. Customers and other creditors holding roughly $1 billion worth of FTX bankruptcy claims have lined up to get an early payout rather than wait for the legal proceedings to conclude.