The U.S. Bankruptcy Court for the District of Delaware issued a ruling on November 29, 2023, authorizing the FTX estate to liquidate its holdings in several trust funds, including Grayscale and Bitwise investments. This green light is a critical step for the collapsed crypto exchange to recover funds for creditors and investors. As of late October 2023, the FTX estate’s positions in Grayscale and Bitwise shares were estimated at $870 million. The court-ordered sale will be executed in coordination with a court-approved investment advisor, with the goal of maximizing returns through professional marketing and distribution. A pricing committee comprising representatives from various stakeholder groups will oversee the sales process to ensure strict compliance. Trust assets may be sold via over-the-counter (OTC) transactions or on trading platforms; however, the debtors retain the right to hold onto the assets based on their “business judgment” assessments.
Claim Transfer Market Heats Up
Beyond the trust asset ruling, the FTX bankruptcy docket managed by restructuring firm Kroll reveals a surge in claim reassignments. Of the most recent 401 docket entries, approximately 21.94% involve claims being transferred to third parties. About 3.24% of these filings originate from Cherokee Acquisition, a specialized firm that acquires bankruptcy and class-action claims via its platform, Claims Market. Between November 1 and November 29, Claims Market facilitated 17 FTX claim transactions, ranging from high-value claims exceeding $1 million to those around $100,000. Current bid prices stand at $0.57 on the dollar, while asking prices hover near $0.61. Numerous other specialized bankruptcy asset buyers are also entering the space. The Delaware Bankruptcy Court has set a fee of $26 per claim transfer.
The active claim transfer market indicates that FTX creditors are opting for immediate liquidity rather than waiting for the lengthy distribution process. As trust asset sales proceed and claim trading intensifies, the FTX estate’s recovery timeline remains under close market scrutiny.