The restructuring team of bankrupt cryptocurrency exchange FTX is actively selling off crypto assets to raise funds for debt repayment. According to FTX’s latest operational report, the company’s cash reserves have nearly doubled from around $2.3 billion in October last year to $4.4 billion at the end of December.
Since its closure in November 2022, FTX’s restructuring team has been actively raising funds to repay creditors. It is estimated that FTX has over one million creditors, with debts to the top 50 creditors totaling $3.1 billion.
According to the latest monthly report, the total cash reserves of FTX Trading Ltd. and its four largest subsidiaries, Alameda Research LLC, West Realm Shires Inc., and Clifton Bay Investments LLC, have almost doubled from around $2.3 billion in October to $4.4 billion at the end of December. The total cash reserves may be even higher when including other FTX subsidiaries.
FTX previously disclosed in a court document that it raised $1.8 billion by selling a portion of its digital assets as of December 8th last year. FTX is also engaging in Bitcoin derivatives trading to hedge Bitcoin exposure and generate additional income from its digital assets. It is also exploring options to restart its trading platform.
After GBTC transformed into a Bitcoin spot ETF and its negative premium approached zero, many investors began to liquidate their positions. FTX was found to have sold nearly 22 million shares of GBTC, worth nearly $1 billion. They almost completely emptied their GBTC holdings.
As FTX’s cash reserves increase, the expected payout ratio for customer claims is also rising. Cherokee Acquisition, a distressed asset investment company responsible for bankruptcy claims and providing liquidity for FTX creditors, stated that as of Friday, the transaction price for claims exceeding $1 million has reached 73% of face value, significantly higher than the 38% in October last year.
Cherokee Acquisition pointed out that the actual transaction price of claims depends on the value of specific claims and other factors.
On January 26th, FTX submitted a modified restructuring application to the court, seeking to estimate the amount of customer claims in US dollars. They are seeking to use the asset values as of the bankruptcy date, November 11th, 2022, which had significant discrepancies with current prices, such as BTC at $16,871, ETH at $1,258, SOL at $16, and AVAX at $14. This has sparked opposition from creditors as customers would not receive full repayment. Sunil Kavuri, an FTX creditor, previously mentioned that there have been up to 153 opposition letters from creditors worldwide. The goal of the creditors is to establish a “physical” repayment framework based on token quantity rather than market price, but the judge has not made a ruling yet.
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