FTX customers get good-bad news as the bankrupt exchange rides the crypto rally
Cashin’ reality checks… The FTX saga appears to be wrapping up, closing a dark chapter for the crypto industry, but former customers still have a bone to pick. The good: the bankrupt exchange confirmed in court records last week that it had recovered over $16B. That’s more than the $11B it owes customers, and the exchange said it could repay nearly all its former account holders with interest. The catch: FTX said they would be repaid the dollar value of their crypto in November 2022, when the exchange declared bankruptcy (not the coins themselves). Back then, bitcoin was worth about $18K and FTX fave Solana was $16. After a big crypto rally, they’re now worth about $60K and $147, respectively.
Feelin’ SBF’d: Customers are (still) angry, with some calling the deal an “insult.” Many want their crypto back (not the 2022-dollar value) and some have filed a lawsuit.
Crypt-oh yeah: Bankruptcy-claims traders, who bought FTX customers’ debt claims for pennies on the dollar, stand to rake in big gains.
Stumbling into a gold mine… FTX can repay customers thanks partly to market luck. Yes, the bankruptcy team worked to seize assets (like: 38 Bahamian properties worth $222M), and some of FTX’s investments (think: genAI giant Anthropic) have ballooned in value. But a major factor that’s upped FTX’s assets is the recent run-up in crypto prices, gains the estate can capture as it plans to repay customers based on pre-rally prices. As of last month, FTX was said to have sold about two-thirds of its solana stash for $1.9B.
Time is an opportunity cost… and FTX customers are splitting the bill. When FTX collapsed, users didn’t just lose their $$; they lost an ability to capitalize on the recent crypto rally because their coins were gone. Many former users, who thought they’d never get their money back, sold their debt claims for cheap. But time has worked in favor of the distressed-debt hedge funds — said to include Attestor, Baupost, and Farallon — who bought those claims, worth hundreds of millions.