[COINDESK, Oliver Knight - FEB 20, 2023]
Distressed asset funds can pick up FTX bankruptcy claims for up to 20 cents on the dollar in private over-the-counter (OTC) markets, a person familiar with the matter told CoinDesk.
FTX filed for bankruptcy in November after its sister company Alameda Research was blown out of levered long positions during the market downswing. Sam Bankman Fried's defunct exchange now owes its 50 largest creditors $3.1 billion.
There are public bankruptcy markets, and they've valuing distressed FTX assets at around $0.16 on the dollar, with individual claims of up to $27 million being sold on bankruptcy marketplace XClaim.
The private OTC markets are showing similar pricing, with distressed asset funds buying in the range of 15 to 20 cents on the dollar, an anonymous FTX creditor told CoinDesk. "They are buying on the projection that they will only get money in five years," the source said. If the funds end up getting 25% in five years, it won't be a great trade as that's only about a 5% annual return. "I think a lot of these firms are projecting around 50 cents on the dollar recovery," the creditor suggested.
The source added that the deals are mostly private as not all claims are fungible, and the "quality" of the claim is also considered in the sale value.
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Xclaim operates the only independent online trading platform for crypto bankruptcy claims. With the largest network of buy-side traders, crypto account holders can trust the competitive and transparent solution of an open-market platform to deliver the highest price and most favorable terms. Xclaim is relentlessly focused on helping its customers unlock value and better allocate risk amid rapidly changing market conditions.