Trade
FTX
claims on Xclaim
FTX Trading Ltd.
Background
On November 11, 2022 FTX Trading, Ltd, a giant among the cryptocurrency trading industry, filed a freefall petition for protection under Chapter 11 of the U.S. Bankruptcy Code. FTX and its founder Sam Bankman-Fried (“SBF”) had once been hailed as the “J.P. Morgan of crypto” and “the White Knight of Crypto” for his assertiveness in providing backstop financing in the wake of drying crypto liquidity in 2022. However, beginning with a leaked balance sheet for Alameda Research, the hedge fund also co-founded by Sam Bankman-Fried, FTX soon encountered a new age run on the bank ultimately leaving millions of creditors across the world
FTX Trading Ltd.
Background
On November 11, 2022 FTX Trading, Ltd, a giant among the cryptocurrency trading industry, filed a freefall petition for protection under Chapter 11 of the U.S. Bankruptcy Code. FTX and its founder Sam Bankman-Fried (“SBF”) had once been hailed as the “J.P. Morgan of crypto” and “the White Knight of Crypto” for his assertiveness in providing backstop financing in the wake of drying crypto liquidity in 2022. However, beginning with a leaked balance sheet for Alameda Research, the hedge fund also co-founded by Sam Bankman-Fried, FTX soon encountered a new age run on the bank ultimately leaving millions of creditors across the world
Pre-petition Capital Structure
At the petition date the company had 100+ entities, each with their own capital structure. Here we generally summarize the types of claims and their asserted amounts in the case. Although the case is not substantially consolidated, Similar claims against different legal entities are receiving similar recoveries.
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Proposed Treatment
Creditors of FTX will receive a combination of cash payments and interests in a liquidating trust, designed to distribute any future recoveries. These recoveries will depend on the continued liquidation of the debtors' assets, which include a diverse portfolio of cryptocurrency, fiat currency, venture capital investments, real estate, and contractual rights to purchase tokens. Since the petition date, the debtors have focused on converting these assets to cash through strategic sales and settlements, while minimizing the risk of market volatility, particularly in relation to cryptocurrency assets. The liquidating trust will hold remaining assets and pursue claims and causes of action, including litigation recoveries and preference actions. As additional assets are monetized or legal actions are settled, creditors may receive further distributions based on the trust’s performance. The debtors have emphasized transparency and prudence in asset liquidation to maximize returns for creditors, though actual recovery percentages will vary depending on claim type and class. Through these measures, FTX aims to maximize the value returned to creditors in an orderly wind-down of the estate.
Estimated Recovery
The FTX estate has over 100 legal entities, each with separate creditors. Most creditors, however, have claims against either FTX Trading, Ltd (international exchange customers), FTX US (U.S. exchange customers), orAlameda Research (digital asset loan customers). Claims against these different entities are generally being treated the same, so we have grouped similar creditors into the following table to increase clarity. Convenience class creditors who have claims under $50,000 will be paid 119% of the petition date value of their claim within 60 days of the plan being effective, subject to KYC requirements. Any further upside in asset appreciation, namely higher values on venture investments, litigation recovery, crypto price appreciation, will benefit larger creditors.
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