May 10, 2024 - Economy

The rise in value of FTX's bankruptcy claims

The line chart shows the fluctuating percentage of a dollar paid for FTX bankruptcy claims from March 10, 2023, to May 8, 2024. The percentage started at 14% and experienced several ups and downs, reaching a peak of 107% by the end of the period.
Data: Xclaim; Chart: Axios Visuals

When FTX went bankrupt in November 2022, the world thought that more than $10 billion had disappeared forever. Now, it has reappeared.

Why it matters: About 40% of the recovered money isn't going to the victims, but to investors who were willing to take a bet on a solid recovery by buying their claims from the original creditors in the secondary market.

  • The chart above shows the price they paid for those bets over time.

Caveat: The dollar-value here is the value of claims on the filing date, which, as we've previously noted, is very much not the present value of the underlying assets for these claims.

  • Now, with new details laid out before the bankruptcy court on anticipated recoveries, pricing claims just got a lot easier for those waiting for a recovery.

By the numbers: Thomas Braziel, a distressed asset investor, said in a video that bigger investors are ultimately likely to receive between 120 to 140 cents on the dollar.

  • That's slightly higher than the 118 cents that will go to small FTX customers owed less than $50,000.

Yes, but: "One big question is still the timeline until recoveries are actually made. The plan is less clear on this issue but makes reference to distributions occurring into 2026," Matthew Sedigh, CEO of Xclaim, told Axios, via a spokesperson.

  • (Braziel said that some folks could be paid before Christmas.)

Flashback: Sedigh noted some events along the way that had a big impact on claims prices:

  • Bitcoin (BTC) and SOL (an asset closely associated with FTX) rising fast.
  • The AI boom and the value of FTX investment Anthropic, for which it was able to raise $884m through the sale of a majority stake.
  • The IRS agreeing to decrease what it was owed.

What we're watching: FTX's amended plan of reorganization is just a draft. "It will probably change a few times around the edges," Braziel said.

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