They stand to watch the hedge fund make more than $1 million in profits as FTX will return more than 100% of the lost value.
An FTX user is going after the hedge fund Olympus Peak to claim additional recovery the fund must provide him. Nikolas Gierczyk sold their $1.59 million FTX claim at a 46% discount to the hedge fund, amounting to $930,000. Now, FTX’s bankruptcy estate will pay creditors 129% to 146% of their claims. In this case, Olympus Peak will receive the payment since Gierczyk sold the rights to it. That repayment will bring Olympus Peak about $2 million to $2.3 million.
Bloomberg reported that Gierczyk is taking Olympus Peak to court for the more than $1 million it stands to make from the process. The basis for his suit relies on the hedge fund not honoring a right to further recovery clause mentioned in the contract.
The FTX repayment plan was finally approved by US Bankruptcy Judge John Dorsey on October 7. With that, creditors will receive their lost assets in cash. “The Court’s confirmation of our Plan is a significant milestone on our pathway to distributing cash to customers and creditors,” said John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of FTX. “Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history.”
Despite the funds returning to FTX users after a long time, creditors have been critical of the amounts repaid due to the value not accounting for asset gains between 2022 and 2024. Sunil Kavuri, leading a group of FTX creditors, mentioned that some will receive only 10% to 25% of the value they lost. The amounts are matched with asset prices during the filing date. Bitcoin fluctuated at around $16,000 during that time.
Hedge Funds Bought Numerous Claims Post-FTX Crash
Numerous creditors who sold their claims to third parties will receive even lesser amounts. Many FTX creditors took this approach to not wait for the legal process to play out to get their hands on some of the value they lost. Moreover, numerous hedge funds got into the action of purchasing claims from creditors during the FTX collapse—a time when other massive firms like Voyager and Celsius also fell apart. Cherokee Acquisition shows that over $600 million in FTX claims were sold to third parties.
