FTX to Reimburse Customers, but Bankruptcy Traders Emerge as Surprising Winners

Full Refunds for FTX Customers

FTX, the now-bankrupt cryptocurrency exchange, has announced a plan to fully reimburse customers and creditors. This includes compensation for the time value of their investments.

Bankruptcy Traders Take the Lead

Contrary to expectations, the biggest beneficiaries of the repayment plan are not customers but bankruptcy traders. These traders bought claims against FTX at a fraction of their value before the exchange filed for bankruptcy.

Hedge Funds and Individual Investors Profit

Hedge funds specializing in distressed debt, such as Attestor, Baupost, and Farallon, have purchased millions of dollars worth of claims. They stand to make significant profits as the bid price of claims has risen to over 100%.

Claims Buyer Profits

Louis d’Origny, the founder of FTX Creditor, a claims buying platform, is also set to profit over $25 million from his personal investments.

Concerns from Some Investors

While the repayment plan has benefited some, not all claimants are satisfied. Some investors argue that the current value of their crypto tokens should be honored, rather than the value at the time of the exchange’s collapse.

FTX Co-Founder Sentenced

Sam Bankman-Fried, the co-founder and former CEO of FTX, has been sentenced to 25 years in prison for defrauding customers.