In a rare outcome for bankruptcy, customers of the failed cryptocurrency exchange FTX will recover all of their money—and then some. Those who lost money when the exchange collapsed in November 2022 are owed around $11 billion, but the estate been able to recover as much as $16.3 billion, court records filed on Tuesday show. As a result, claims will be repaid with interest.
John Ray, FTX’s CEO who replaced Sam Bankman-Fried, who is currently serving a 25-year prison sentence, has been in charge of cobbling together the estate’s assets. “John and the team absolutely crushed it,” Thomas Braziel, a broker at 117 Partners who buys FTX claims on behalf of some of the largest hedge funds in the market, told Fortune.
The exact value customers will be repaid depends on the type of claim they filed. While some could recover as much as 142% of what they held, the vast majority are likely to receive 118%. The specific pay day is estimated to be months away.
While the gains are unusual and impressive, the biggest winners in the FTX affair are those who trade bankruptcy claims. After the exchange collapsed in late 2022, a handful of hedge funds and individual investors moved quickly, and began buying up claims for a few cents on the dollar before the exchange even officially filed for bankruptcy. Data from Claims Market, an online brokerage platform that has facilitated the trade of over 500 claims, shows that the bid price of claims has risen from 10% to 101% as of Wednesday.
Chapter 11 filings, as of March 20, show the buyers set to make the largest returns from FTX scraps are hedge funds specializing in distressed debt. Attestor, Baupost, and Farallon, which had each bought claims worth over $520 million, $518 million, and $346 million, respectively, are leading the race. The funds have used alternative entity names confirmed by people close to the matter.
Louis d’Origny, founder of claims buying platform FTX Creditor, who bet his personal funds on a full recovery, and set to profit over $25 million. He says he’s “incredibly, pleasantly surprised” with the announcement. Ray has sold “everything that wasn’t nailed down to the floor,” he said.
The lucrative recovery is partially due to the crypto market’s renewal since 2022, with Bitcoin up over 190% since the exchange went bust. As a result, the company’s crypto assets have appreciated in value. Likewise, FTX’s shares in the AI startup Anthropic have also appreciated…
Click Here to Read the Full Original Article at Fortune | FORTUNE…
