Some customers with accounts stuck in failed cryptocurrency companies are choosing to take a big loss on their investments now to avoid dealing with uncertainties in drawn-out bankruptcies.
At least hundreds of customers burned by the collapses of FTX, Celsius Network LLC and Voyager Digital Ltd. are seeking to sell their cryptocurrency claims at deep discounts so they don’t have to wait months or even years to see what they might recover as the platforms move through chapter 11.
Customers and other creditors holding roughly $1 billion in FTX claims and about $100 million in Celsius claims have expressed interest in selling them through an online market run by Cherokee Acquisition, a bankruptcy claims broker and buyer, the firm said.
Nearly 500 users of FTX, Celsius and Voyager have posted claims valued at roughly $126 million for sale on Xclaim Inc.,a bankruptcy claims trading startup that recently changed its business to focus on providing a platform to buy and sell crypto claims. Xclaim has so far listed roughly $91.7 million in FTX customer claims, the company said.
These investors are taking the loss upfront to avoid going through bankruptcy proceedings that don’t necessarily guarantee them a better outcome or they don’t have the time to find out.
“[Bankruptcy] takes more time than people can deal with,” said Vladimir Jelisavcic, founder and manager ofCherokee Acquisition. “Some people need or want money now.”
Xclaim founder and Chief Executive Matt Sedigh said the firm is getting calls from creditors every day. Because most ofFTX’s users live overseas, roughly two-thirds of the FTX claims submitted come from creditors based in China, Hong Kong and Taiwan, Mr. Sedigh said.
On the other end of the transactions, hedge funds and distressed-debt investors are making calculated bets. Fund managers including Contrarian Capital Management LLC, Invictus Global Management and digital-asset investment firm NovaWulf Digital Management have bought claims from Celsius or Voyager creditors, court papers show.
