FTX’s Price Rally Anticipates Estimation Hearing

Ahead of an upcoming estimation hearing on January 25th, prices of claims on the crypto exchange FTX have seen an increase. Creditors are hopeful that the ruling will favor their demand for repayments in cryptocurrency. Investment banking firm Cherokee Acquisition has reported that FTX claims are currently trading at nearly 80 cents to the dollar. The Claims Market account, managed by the claims firm, has noted that prices have continued to rise in anticipation of the court hearing. FTX has proposed to pay back its creditors based on the price of cryptocurrency on the day of its bankruptcy, but creditors are determined to receive their repayments in terms of the number of tokens lost rather than market prices.

Data sourced from Cherokee Acquisition and Claims Market reveals that FTX claims of over $3 million have increased by up to 80%. This increase in claim pricing is seen as a positive sign, indicating creditor confidence in receiving substantial repayments. Other bankrupt crypto companies, including Alameda Research, Genesis Global, and Three Arrows Capital, have also experienced significant increases in claim prices.

Notably, objections to the debtor’s motion to estimate claims have been filed by over 100 retail FTX customers worldwide, with submissions coming from countries such as South Korea, the United States, Canada, and the United Kingdom. More than one million creditors are seeking redemption from the fallout of FTX’s bankruptcy. FTX has disclosed that it owes $3.1 billion to its top 50 creditors, with the largest creditor being owed $226 million.

In an attempt to raise funds, the FTX estate and Alameda Research have reportedly sold a substantial portion of their Grayscale Bitcoin Trust shares, generating at least $600 million. Prior to January 11th, when the trust was converted into a spot exchange-traded fund, the FTX estate held 22.28 million shares of the Grayscale Bitcoin Trust worth $902 million. This sale of shares has provided additional capital for the FTX estate.

The upcoming estimation hearing on January 25th will be crucial for both FTX and its creditors. The ruling will determine whether creditors will receive repayments based on the value of cryptocurrency on the day of bankruptcy or whether they will be granted “in-kind” repayments based solely on the number of tokens lost. This decision will have a significant impact on the future of FTX and its creditors, and the market is closely watching the developments.