FTX bankruptcy Claims Rise in OTC Markets, Estate Recovers $7.3 Billion

2023-10-10, 03:54

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The FTX exchange has recovered assets worth more than $7.3 billion.

Plans to re-launch the FTX crypto exchange are at an advanced stage.

The court denied Sam Bankman-Fried a temporary jail release.

Keywords: What Happened to FTX, Charges against Bankman-Fried, collapse of FTX, FTX crash, Bankrupt crypto exchange FTX, FTX news, FTX filed for Bankruptcy, FTX creditors, FTX asset recovery
## Introduction 
Despite the gloominess which the [FTX founder Sam Bankman-Fried faces due to imprisonment and court trials](https://www.gate.io/blog_detail/3017/ftx-sues-sam-bankman-fried-and-former-_s-for-1-billion "FTX founder Sam Bankman-Fried faces due to imprisonment and court trials"), there are some positive developments regarding FTX’s asset recovery process and the rise in its Bankruptcy claims in the OTC markets.

Today, we cover some positive developments for FTX. We also touch on the general issues related to the FTX founder, Sam Bankman-Fried. 
## Pay-outs to FTX Creditors Triple
Matrixport, a digital assets platform, recently reported that the market values of FTX Bankruptcy claims have tripled in 2023. The once high risk FTX Bankruptcy claims are now touted as the “hottest” in the market.

When FTX filed for [bankruptcy in November 2022](https://www.gate.io/explore/ftx-sbf "bankruptcy in November 2022") the claims were very low due to the complex nature of the former cryptocurrency exchange’s issues. By that time many of its former executives were under trial and none of them had pleaded guilty to the charges levelled against them.

The data which Matrixport published indicates that the value of the FTX Bankruptcy claims has risen to an average of 37 cents per dollar, which is its highest since November 2022. In the early days, the average value of the claims was slightly over 10 cents. 
## Why the Value of the Bankruptcy Claims Matter? 
The creditor claims arise when a company becomes insolvent and files for Bankruptcy the way FTX did in 2022. In that case, there are two types of creditors.

There are creditors who wait to get their pay-outs after the resolution proceedings. Nevertheless, other creditors may choose to dispose of their claims to speculators on the market.

The values of such pay-outs will depend on the demand for the claims in the market. In November 2022 the values of the Bankrupt crypto exchange FTX creditor claims were very low because the FTX case was one of the most complicated Bankruptcy cases in the United States. As a result, it also has high legal fees, in excess of $200 million. 
## The Reasons behind the Rise in Values of FTX Creditors’ Claims 
There are several reasons for the recent surge in the values of the FTX Bankruptcy claims. However, the main contributing factor has [been the success of the asset recovery process](https://www.gate.io/blog_detail/3199/daily-news-ftx-has-been-approved-to-liquidate-its-crypto-assets-ethereum-futures-premiums-are-low-crypto-market-is-experiencing-a-serious-liquidity-crisis "been the success of the asset recovery process").

After the filing of the Bankruptcy case [following the collapse of FTX](https://www.gate.io/blog_detail/1806/FTX-s-collapse--Affected-a-Wide-Cross-section-of-the-Crypto-Eco- "following the collapse of FTX"), the crypto exchange tasked John Ray III, an experienced Wall Street Bankruptcy lawyer, to take charge of the asset recovery process. Therefore, under the leadership of Ray III, the FTX asset recovery process was swift and efficient as the exchange has so far recovered more than $7.3 billion.

The recovered assets include $3.4 billion worth of cryptocurrencies, $1.1 billion in cash and real-estate, located in the Bahamas, valued at more than $200 million. Nevertheless, the FTX asset recovery team is yet to recover some other assets which include minor donations. There is also an outstanding $2.1 billion claim against Binance and $700 million against K5, an investment firm.
## FTX’s 7 Billion Asset Pool in Anthropic
As per the latest FTX news, the crypto exchange had a $500 million stake in Anthropic, an artificial intelligence (AI) firm. Before its collapse FTX used the customers' funds to invest in the Amazon backed start-up. As a result of this, the FTX creditors have a claim in Anthropic.

Recently, Amazon stated that it intends to inject up to $4 billion in the start-up. Such news has helped to raise the value of FTX creditor Bankruptcy claims. 
## The Prospect of FTX 2.0
The other cause of the recent surge in the value of FTX creditors’ claims is the high possibility of the re-launch of the FTX crypto exchange, which is popularly referred to as FTX 2.0. The fact that the resuscitation of FTX could make every creditor an equity owner has pushed the value of the claims up.

Matrixport has strongly hinted on the possibility of the re-launch of FTX, something which is not new in the crypto space. It said, “The successful recapitalization of an exchange has been achieved before, with every creditor becoming an equity owner. Understanding this dynamic could be of material significance to claims holders.”

Thomas Braziel, the co-founder and managing partner of 507 Capital, an asset investment firm, also said, “FTX [claims] are probably the hottest ticket in town. The market is so hot that distressed asset investors are absolutely clambering over each other for claims.”
## Optimism Fuels Frenzy in FTX Bankruptcy Claims 
According to CNBC, there is so much <a href="/price/optimism-op" target="_blank" class="blog_inner_link">Optimism</a> among the FTX creditors. Most of them still strongly believe in cryptocurrencies and are willing to invest more in them. For example, Evan Luthra, an angel investor and app developer, said that the FTX crash does not indicate the failure of <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> or other cryptocurrencies.

In an interview with CNBC Luthra, who lost $2 million when FTX filed for Bankruptcy, said, "I do want everybody to understand that the mistake here was not bitcoin, the mistake was not crypto. The fundamental reason why we <a href="/how-to-buy/bitcoin-btc" target="_blank" class="blog_inner_link">buy Bitcoin</a>, why we use bitcoin has not changed."

Another FTX former customer, Jake Thacker, said "I'm in quite a big hole right now.” However, he said that he “would encourage people to still invest in crypto."

Sunil Kavuri, another FTX customer, said that he has not lost hope in cryptocurrencies. He stated that the collapse of FTX did not shake his faith in cryptocurrencies.  He said, "I think cryptocurrencies… should be here to stay."
## Recent News about FTX and SBF
The impact of what happened to FTX is far reaching. For instance the court is still dealing with various charges against Bankman-Fried. And SBF is still in prison as a result of the FTX crash. Let’s briefly cover trending issues that comprise recent FTX news.

**Sam Bankman-Fried Denied Temporary Release**: Judge Lewis Kaplan has denied Bankman-Fried temporary release for the duration of his trial. The lawyers representing Bankman had applied for his release to enable them to review the material together. According to the prosecutors, Bankman-Fried's lawyers failed to provide convincing proof of the need for the temporary release.

Read also: [“There is nothing I Can Do to Make It Positive” Sam Bankman-Fried’s Perspective on Impact and Responsibility](https://www.gate.io/blog_detail/3251 "“There is nothing I Can Do to Make It Positive” Sam Bankman-Fried’s Perspective on Impact and Responsibility")

**CoinDesk Win a Loeb Award**: CoinDesk has won a top journalism prize for covering various topical issues related to FTX and its [sister company Alameda Research](https://www.gate.io/blog_detail/1748/disclosure-about-alameda-and-ftx-how-can-users-avoid-risks-when-organizations-are-in-chaos "sister company Alameda Research"). Tracy Wang, Nick Baker, Ian Allison, Nikhilesh De, Reilly Decker’s Cheyenne Ligon, Sam Reynolds and Sam Kessler reported about what happened to FTX.

Read also: [Former FTX Executive Riyan Salame Pleads Guilty](https://www.gate.io/blog_detail/3219/former-ftx--utive-guilty-plea "Former FTX Executive Riyan Salame Pleads Guilty")

**Sam Bankman-Fried Can Use an 'Air-Gapped' Laptop**: The court has allowed Bankman-Fried to use an 'Air-Gapped' Laptop to take notes during his court trial. However, the laptop will not have internet service. Also, SBF will not keep the laptop after the court sessions.

Read also: [FTX Sues Sam Bankman-Fried and Former Execs for $1 Billion](https://www.gate.io/blog_detail/3017/ftx-sues-sam-bankman-fried-and-former-_s-for-1-billion "FTX Sues Sam Bankman-Fried and Former Execs for $1 Billion")

**Sam Bankman-Fried’s Biggest Grift?** Sam Bankman-Fried used fraudulent, unethical, unprofessional and manipulative means to grow his FTX crypto exchange. For example, the exchange lagged during market volatility. Its customer service was very bad while several venture capitalists misled the customers through [their hype about SBF and the exchange](https://www.gate.io/explore/ftx-sbf "their hype about SBF and the exchange"). 
## Conclusion
The values of FTX Bankruptcy claims have increased in 2023 due to several factors, including the prospect of FTX exchange re-launch, its stake in Anthropic and the increase in recovered assets. In the meantime, the trial of Bankman-Fried is set to continue. 
## FAQs about FTX Crypto Exchange
### What happened with FTX bankruptcy?
FTX crypto exchange [filed for Bankruptcy in November 2022](https://www.gate.io/explore/ftx-sbf "filed for Bankruptcy in November 2022") after it became insolvent. From that time to date, it has been recovering some of its assets. So far, it has recovered more than $7.3 billion and its recovery effort is still on-going.
### Will FTX money recovered?
The Bankrupt FTX crypto exchange is in the process of recovering its funds. To date, it has recovered more than $7.3 billion. However, there is still the prospect of recovering more funds from a few more organizations.
### Is FTX shutting down?
FTX shut down in November 2022 when it became insolvent. However, efforts are on-going to relaunch it after it has recovered much funds. The Bankrupt exchange has already filed a series of court documents in a bid to re-launch the cryptocurrency exchange. There are more than 75 bidders interested in re-launching the exchange.
### How long will FTX bankruptcy last?
According to the United States laws a company can remain under Bankruptcy for up to 10 years from the date it has made its court filings. Since FTX filed for Chapter 11 Bankruptcy it can reorganize and re-launch its operations before the 10 year period lapses.

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<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
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