FTX creditor claims heat up as bankruptcy proceedings drive forward

The market is warming to FTX claims, with one claim going for between 52 and 53 cents on the dollar at auction on Friday.

The market for FTX creditor claims has been heating up, with some claims now reportedly selling for more than 50 cents on the dollar, according to Thomas Braziel, partner at 117 Partners — a firm specializing in crypto bankruptcy claims.

Braziel told Cointelegraph that a claim worth more than $20 million recently sold for between 52 cents and 53 cents at auction on Oct. 20, though noted that only the best claims typically reach this price tag, adding:

“The market has really firmed up for smaller claims, with smaller claims being north of $500K to $800K and up.”

“Those claims are now trading between the high-end of 30 cents and the lower end of 40 cents,” he added, reiterating that only the “cleanest” claims with the right buyer could sell at these prices.

The increased value of creditor claims appears to follow recent clawback efforts from the bankrupt crypto exchange, as well as capital-raising efforts from a company it had previously invested in.

In April 2022, Anthropic raised $580 million in a series B funding round led by Sam Bankman-Fried, the former CEO of the now-defunct FTX.

On Sept. 25, Amazon announced a $4 billion investment in Anthropic. Anthropic is looking to raise capital at a potential $30 billion valuation, making FTX’s investment in the company worth somewhere between $3.5 and $4 billion.

According to an Oct. 4 post from the FTX creditor coalition, this valuation could be enough to see FTX creditors made whole.

Anthropic to raise from Google at 20-30B valuation, putting FTX’s stake at 3-4.5B.

FTX customers now stand to be made whole. pic.twitter.com/Vy9mZc8bEl

— FTX 2.0 Coalition (@AFTXcreditor) October 3, 2023

Despite the growing enthusiasm for FTX claims, Braziel added that there were still some concerns that needed to be addressed, but overall the increasing valuation of claims was a good sign for creditors.

“There’s still a lot to iron out. KYC and AML issues are still popping up.”

Braziel said that the recent Settlement and Plan Support announced by the Ad Hoc Committee of non-US FTX customers on Oct. 18 was a significant win for a number of firms who had been looking to sell their claims on the market.

A crucial element of the amended support plan is the “shortfall claim,” in which FTX debtors estimate that customers of FTX.com and FTX US would collectively receive 90% of distributable assets. The shortfall claim is estimated at approximately $8.9 billion for FTX.com and $166 million for FTX.US.

“They were kinda stuck with a bag they really couldn’t sell because it was really unclear how customer clawbacks were going be treated,” said Braziel. “For all the trading and market-making firms, the planned support agreement and the draft outline are really helpful for trading firms to be able to sell their claims.”

Since FTX first filed for Chapter 11 bankruptcy protection on Nov. 11, 2022, the FTX Debtors’ estate headed by new CEO John Ray III, has made a series of moves to regain lost assets, including the sale of FTX holdings as well as significant clawbacks from other crypto firms and former-FTX seigniorage.

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