The FTX bankruptcy estate is embroiled in a legal dispute with Jump Trading subsidiary, Tai Mo Shan, over a $264 million claim related to an undelivered loan of 800 million Serum (SRM) tokens from Alameda Research.
Loan at the Center of the Dispute
The crux of the issue lies in a loan agreement where Alameda Research, affiliated with FTX, was supposed to deliver 800 million SRM tokens to Tai Mo Shan. This agreement aimed to support Serum, a decentralized exchange (DEX) heavily backed by FTX. Jump Trading, a major investor in Serum, provided market-making services for the DEX.
However, with FTX’s collapse in November 2022, the DEX also fell apart, raising questions about its true decentralization. The planned 2023 loan never materialized due to these events.
FTX Challenges Claim’s Validity
Tai Mo Shan argues that Alameda’s failure to deliver the tokens warrants $264 million in damages from the FTX estate. However, FTX lawyers counter that the loan agreement itself is invalid as the tokens were never delivered, rendering the entire deal null and void. They point to the Master Loan Agreement, which allows for nullification if a loan fails to commence.
FTX Raises Questions about Loan Terms
FTX’s legal team further suggests the loan agreement’s terms, involving a massive token transfer without any fees or interest, might be indicative of fraudulent transfers. They claim further investigation may expose more details about these potential irregularities.
Also Read: FTX Scandal Deepens: Founder’s Family Implicated In $100 Million Political Donation Scheme
Valuation Dispute Adds Another Layer
The $264 million claim by Jump Trading relies on an options model that factors in the market price of SRM at the time of FTX’s bankruptcy filing, the repayment option price, SRM’s volatility, and the loan’s interest rate. However, FTX lawyers strongly contest this valuation, calling it “wholly unsupportable” and criticizing the underlying options model as flawed and poorly documented.
The Road Ahead
This legal battle is a significant development in the ongoing FTX bankruptcy proceedings. The court will need to determine the validity of the loan agreement and assess the legitimacy of Jump Trading’s claim and valuation method. The final verdict will likely have a rippling effect on how other creditor claims are handled in the FTX bankruptcy case.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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