Ikigai, an asset management firm, has disclosed that a significant portion of its hedge fund's assets were held in FTX at the time of the exchange's collapse. The firm has recently sold its claims during FTX's bankruptcy process.
Travis Kling, Ikigai's Chief Investment Officer, mentioned in a post on X (formerly known as Twitter) on December 22 that the company offloaded its $65 million claim in the FTX fund. The sale was motivated by the offer price being unexpectedly high. While Kling did not specify the sale price, there are indications that some creditors might receive as much as 73 cents on the dollar, a rate not seen since FTX's downfall in November 2022.
Kling explained that the decision to sell a claim is largely influenced by the opportunity cost - the potential future increase in claim prices versus the immediate use of cash for other profitable investments. He stated, "Following the cash received from this sale, investors wishing to withdraw from the fund are now able to do so, though most of the funds are still invested."
Kling expressed initial interest in the idea of "FTX 2.0," but noted dissatisfaction with the debtors' handling of the process and the slow pace of progress, leading to the decision not to wait for developments. Over a year after FTX and its affiliates declared bankruptcy, legal advisors and brokers are urging affected users to sell their claims. This approach offers retail investors a chance to recoup some losses sooner rather than waiting potentially years for compensation from FTX's debtors.
Some creditors have shared on social media their preference to receive funds sooner to reinvest in cryptocurrencies, hoping to capitalize on a possible market upswing. However, this comes with the risk of missing out on potentially larger returns if they wait for the FTX bankruptcy case to conclude. Firms offering to buy FTX claims include Cherokee Acquisition and Open Exchange, supported by Three Arrows Capital co-founders Su Zhu and Kyle Davies. Additionally, in June, the bankruptcy claims platform Found reported that an FTX creditor used their claim as collateral for a loan in a DeFi protocol named Arcade.
