Ikigai Asset Management sells $65M claim to FTX bankruptcy

Ikigai, an asset management firm that revealed a large majority of its hedge fund’s assets had been on FTX when it collapsed, said it had sold its claim in the exchange’s bankruptcy proceedings.

In a Dec. 22 post on X (formerly Twitter), Ikigai Chief Investment Officer Travis Kling said the firm sold a $65 million claim to its FTX funds because the price was “much, much higher” than expected. Kling did not say at what price the firm had sold the claim, but reports suggested that some creditors could get up to 73 cents on the dollar — the highest price since FTX’s collapse in November 2022.

“At the end of the day, the decision on whether to sell the claim was mostly a function of opportunity cost – how much do you think the claim price would increase in the future vs taking the cash now and deploying it into something else that can earn a return,” said Kling. “Now that we have received the cash proceeds from the sale of the claim, all of our investors that want to redeem from the fund are able to do so. The large majority of the capital is staying in the fund.”

He added:

“I was (and still am) very interested in FTX 2.0. But the Debtors have fumbled that process so badly, and progress has been so slow, that it didn’t make sense for us to hang around in the claim any longer waiting for something to maybe happen with 2.0.”

More than a year after FTX and many of its subsidiaries filed for bankruptcy, lawyers and brokers continue to call on affected users to sell their claims. The advantage for retail investors means getting back some of their missing funds faster than waiting months or years for potential compensation from the FTX debtors.

Some creditors have said on social media they would prefer to receive funds earlier to invest in crypto rather than miss out on a potential bull run. However, should they choose to cash out, they will likely miss out on a potentially higher payout once FTX’s bankruptcy case wraps.

Among the firms offering cash for FTX claims include Cherokee Acquisition and Open Exchange — the platform backed by Three Arrows Capital co-founders Su Zhu and Kyle Davies. Bankruptcy claims platform Found also reported in June that an FTX creditor pledged a claim as collateral for a loan in the decentralized finance (DeFi) protocol Arcade.

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