FTX Creditor Claims Going for 13 Cents on the Dollar on Bankruptcy Marketplace Xclaim

Claims trading platform Xclaim says it has doubled its pool of claims buyers due to interest from FTX.

AccessTimeIconJan 11, 2023 at 11:58 a.m. UTC
Updated May 9, 2023 at 4:05 a.m. UTC
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The $91.7 million in FTX creditor claims listed on the claims trading marketplace Xclaim will likely get around 13 cents on the dollar, according to data released by the site.

This is in contrast to the much higher prices that failed companies Voyager Digital, BlockFi and Celsius Network are getting, with claims trading at 41 cents, 28.5 cents and 18.5 cents, respectively.

According to Xclaim’s chief strategy officer, Andrew Glantz, this discount is occurring because there’s less public information available about the claims.

“Part of that is because most creditors, most account holders, still can’t access their accounts even to provide a basic screenshot of what their account looks like. It becomes harder to verify that they are actually owed,” Glantz said to CoinDesk in an interview. “That’s much easier in Celsius and Voyager where creditors, even if their funds are frozen, can at least access their account, take a screenshot, provide account details and get a buyer comfortable that their claim is a valid claim.”

Despite this, Glantz says there remains interest in FTX creditor claims, and around 80 new buyers have been onboarded in the last month as a result. This pool of buyers includes hedge funds and specialized traders that are “generally well known in the restructuring community.”

As Xclaim is a marketplace and the prices are dynamic, the current 13 cents to 13.5 cents for the FTX claims are reflective of the market’s belief of how easy this case will be to resolve.

“You’ve got competing interests from BlockFi to [Sam Bankman-Fried] to creditors arguing over who owns Robinhood shares and the government going and taking possession of those,” Glantz told CoinDesk, predicting that this case could be before the courts for a decade. “With all of these little skirmishes, each one of those shifts potentially shifts value from one group of creditors to another group of creditors.”

The sellers of the claims – while anonymous – are heavily focused in Asia. Glantz said that half are from Singapore, 15% from China and 23% from Taiwan. Taiwan had some of the highest per-capita losses on FTX, given Taiwanese attraction to FTX’s high interest on U.S. dollar deposits.

Also included is a decentralized autonomous organization (DAO), which will present a number of challenges given its governance structure.

Xclaim isn’t the only market facilitating the buying and selling of FTX creditor claims. Shortly after the exchange’s bankruptcy, Cherokee Acquisition, which operates a similar marketplace, started offering trades at 8 cents to 12 cents on the dollar.

Thomas Braziel, a managing partner at distressed corporate specialist 507 Capital, told CoinDesk at the time that these prices weren’t realistic, and 3 cents to 5 cents would be where the market has an interest. However, as the case slowly progresses forward it seems like the market has developed a bit more optimism.

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