The cryptocurrency exchange FTX filed for bankruptcy on Friday, leaving users’ funds stuck on the platform. One marketplace for distressed claims posted bids for a fraction of the original value of claims.
People who lost money on the troubled cryptocurrency exchange FTX and want to get at least some of it back can sell their credit claims, but they’ll only get back a small portion of their holdings.
Cherokee Acquisition, a company that buys troubled assets and also has a market for credit claims against bankrupt companies, sent out its latest price table on Tuesday. It gave FTX users with deposit claims over $100,000 a guide price of 8 to 12 cents on the dollar.
When a company declares bankruptcy or files for Chapter 11 bankruptcy protection, like FTX did last Friday, creditors who don’t want to wait until the end of a long bankruptcy process to get some or all of their assets back can sell their credit claims to companies that buy distressed assets.
The relatively low prices for FTX claims suggest that FTX users are less likely to get their money back.
In comparison, Earn account holders of the bankrupt crypto lender Celsius Network may get around 20 cents on a dollar after selling their claims, while creditors of Voyager Digital, the crypto brokerage platform that was sold to FTX at auction, may get 40 cents on a dollar for their claims.
Thomas Braziel, the managing partner at distressed corporate specialist 507 Capital, told CoinDesk that even this low price might be too much for some people to pay.
He said, “No one will buy them at that price.” He said that 3 to 5 cents would be a more realistic market price for deposit claims.
FTX, which is part of Sam Bankman-crypto Fried’s conglomerate of more than 130 companies, filed for bankruptcy protection on Friday after it illegally used customer deposits for lending and investing and a bank run revealed a $10 billion hole in its balance sheet.
Many people, including large trading firms like Genesis Trading, Galois Capital, and Ikigai Asset Management, were left with their money stuck on the platform.
After FTX first stopped withdrawals a week ago, users made ad hoc Telegram chat groups to sell their held deposits on the exchange.
