The U.S. Bankruptcy Court for the District of Delaware has granted approval for the FTX estate to sell or transfer its holdings in several trust assets, including shares in Grayscale and Bitwise funds, valued at an estimated $870 million. The court order, issued on November 29, 2023, marks a significant step in the liquidation process of the collapsed cryptocurrency exchange, aiming to recover funds for creditors and investors.
Court Greenlights Trust Asset Disposal
The judicial order permits the sale or transfer of these trust assets in a professional manner to maximize returns. The FTX estate will collaborate with a court-approved investment advisor to market and sell the assets, targeting the highest possible proceeds. Transactions may be executed through over-the-counter (OTC) deals or on trading platforms. A pricing committee, comprised of representatives from various stakeholder groups, has been established to oversee the sales process, ensuring transparency and fairness.
Despite the green light to sell, the debtors retain the discretion to hold onto some trust assets based on their “business judgment” evaluations. As of late October 2023, the FTX estate’s holdings in Grayscale and Bitwise shares were appraised at roughly $870 million. Court filings emphasize that the sale strategy is designed to optimize value recovery, providing a foundation for future distributions to creditors.
Claim Transfers Surge: Nearly 22% of Recent Docket Entries Involve Assignments
Beyond the trust asset decision, the FTX bankruptcy docket maintained by restructuring firm Kroll reveals a substantial volume of claims being reassigned to new holders. Of the most recent 401 entries in the bankruptcy court’s docket, approximately 21.94% represent the transfer of claims to external entities. Among these, about 3.24% originate from Cherokee Acquisition, a firm specializing in acquiring claims in bankruptcy and class action lawsuits, operating through a platform known as Claims Market.
From November 1 to November 29, 2023, Claims Market facilitated 17 transactions of FTX claims, ranging in value from over $1 million down to roughly $100,000. Currently, the platform’s bid price stands at $0.57 on the dollar, while asking prices hover at $0.61 on the dollar. In addition to Claims Market, a variety of other specialized companies engaged in purchasing bankruptcy assets are also acquiring FTX claims. According to the Delaware District Bankruptcy Court, the fee for transferring each claim is set at $26.
The decision by creditors to trade their claims for immediate cash reflects ongoing uncertainty regarding the final outcome of the FTX bankruptcy and a strong desire for liquidity. As asset sales and claim transactions progress, the FTX restructuring process appears to be accelerating. Industry observers note that these developments could serve as a template for other crypto bankruptcy cases, demonstrating how distressed assets can be monetized and how secondary markets for claims can provide early exits for creditors.
With the court’s approval and the active trading of claims, the FTX estate is moving closer to distributing recoveries to affected parties. However, significant legal and operational hurdles remain before any final payouts can be made. The coming months will likely see further asset sales and claim transfers as the estate continues to unwind one of the largest collapses in crypto history.