In a significant development, lawyers representing the embattled cryptocurrency exchange FTX have requested a Delaware bankruptcy court to severely devalue or nullify customer claims associated with four digital tokens closely tied to the company’s disgraced founder, Sam Bankman-Fried.
During a court hearing on Mar 26, 2024, FTX attorney Brian Glueckstein argued that customer claims for the native tokens of Maps (MAPS), Oxygen (OXY), Serum (SERUM), and Boba (BOBA) should be heavily discounted or reduced to zero. These tokens, collectively called “Sam Coins,” were closely linked to Bankman-Fried’s operations and have come under intense scrutiny in the ongoing bankruptcy proceedings.
Glueckstein explained that FTX’s valuation experts had conducted a careful analysis to determine the petition date value of these assets, arriving at reasonable discounts on their value. He stated, “The customers attribute values to claims on digital assets assuming a market that never has and never will exist.”
According to FTX’s valuation expert, Sabrina Howell, the firm held more than 95% of the OXY and MAP tokens, making it virtually impossible to liquidate them in the foreseeable future without significantly depressing their value. Howell estimated it could take decades to offload many of these tokens.
After analyzing the situation, FTX declared the claims associated with MAPS and OXY tokens, which have a current value exceeding $600 million, worthless. Additionally, they recommended discounting claims related to SERUM tokens, worth $509 million, by approximately 58%.
However, FTX customers still holding these “Sam Coins” vehemently opposed these valuations, requesting the court to overrule FTX’s estimates. The customers claimed that the four digital assets are still worth more than $1.1 billion, significantly higher than FTX’s assessments.
FTX Bankruptcy: Judge Assessment
Judge John Dorsey, overseeing the bankruptcy case, acknowledged the inherent challenges in quantifying the worth of cryptocurrencies. He asserted that the trades themselves are the sole source of value. As far as I can tell, cryptocurrency trades on sentiment and nothing else.” Dorsey heard arguments from both sides and indicated that he would take the matter under advisement before ruling on how to estimate the value of these disputed crypto assets.
The tokens in question have faced substantial devaluations since their peak. MAPS, the Solana-based native token for the Alameda-backed Web3 travel platform Maps. me, has collapsed 98% from its May 2021 all-time high, currently trading at $0.03. OXY, the Solana-based Oxygen DeFi brokerage token backed by Alameda Research, has similarly plummeted 98% from its all-time high, currently trading at $0.08.
The valuation of these tokens, currently under legal scrutiny, directly affects Sam Bankman-Fried’s future. Nearly a year following FTX’s downfall, the U.S. government convicted him on seven counts of fraud. While the prosecution recently proposed a maximum 50-year sentence, Bankman-Fried’s lawyers argue that this unfairly casts him as a “depraved super-villain.”
As the bankruptcy proceedings continue, resolving the “Sam Coins” valuation dispute will have far-reaching implications for FTX customers and the broader cryptocurrency ecosystem, further shaping the aftermath of one of the industry’s most significant scandals.
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