The restructuring team of bankrupt cryptocurrency exchange FTX is actively selling off crypto assets to raise funds for debt repayment. The latest operational report released by FTX shows that the company’s cash reserves have nearly doubled from approximately $2.3 billion in October last year to $4.4 billion at the end of December.
Since its closure in November 2022, the FTX restructuring team has been actively raising funds to repay its creditors. According to previous public documents, FTX is estimated to have over one million creditors, with debts owed to the top 50 creditors totaling up to $3.1 billion.
According to the latest monthly operational report, the total cash reserves of FTX Trading Ltd., Alameda Research LLC, West Realm Shires Inc., Clifton Bay Investments LLC, and other subsidiaries of FTX have almost doubled from around $2.3 billion at the end of October to $4.4 billion at the end of December. The total cash reserves may be even higher when including other FTX subsidiaries.
In a court document filed last month, FTX disclosed that it raised $1.8 billion by selling a portion of its digital assets as of December 8 last year. FTX is also engaging in Bitcoin derivative trading to hedge its Bitcoin exposure and generate additional income from its digital assets. It is also exploring options to restart its trading platform.
Following the transition of GBTC to a Bitcoin spot ETF and the near-zero discount of GBTC, many investors began to sell off their holdings for profit. FTX was found to have sold nearly 22 million shares of GBTC, worth nearly $1 billion. Its GBTC holdings have almost been completely liquidated.
As FTX’s cash reserves increase, the expected payout ratio for customer claims also rises. Cherokee Acquisition, the distressed asset investment company responsible for bankruptcy claims and providing liquidity to FTX creditors, stated that as of last Friday, the trading price of claims exceeding $1 million reached 73% of face value, significantly higher than the 38% in October last year.
Cherokee Acquisition pointed out that the actual trading price of claims depends on the specific value of the claims and other factors.
FTX submitted a modified reorganization application to the court on January 26, seeking to estimate the customer’s cryptocurrency claim amount in US dollars. It is seeking to estimate the value of assets based on the bankruptcy date of November 11, 2022. On that day, BTC was valued at $16,871, ETH at $1,258, SOL at $16, and AVAX at $14, which differs significantly from current prices.
This has sparked opposition from creditors as customers would not receive full repayment. Sunil Kavuri, an FTX creditor, previously stated that there have been up to 153 opposition letters from creditors worldwide. The current goal of the creditors is to seek the establishment of a “physical” repayment framework, where claims are based on token quantities rather than market prices, but the judge has not yet made a ruling.
Additional reading:
FTX Claims Hearing Scheduled for January 25! Creditors Optimistic “Possibly Direct Compensation” with Increased Payout Ratio to 80%
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