During a Tuesday hearing in Delaware, court documents unveiled FTX’s intention to declare its creditors’ “Sam Coins” effectively worthless amid the company’s extensive bankruptcy proceedings.
FTX has announced the devaluation of “Sam Coins.
FTX Trading LTD. has enlisted the expertise of NYU Professor of Finance Sabrina Howell to delve into the valuation of several “Sam Coins” amidst the ongoing bankruptcy proceedings. Among the cryptocurrencies under scrutiny are Serum, Maps, and Oxygen.
Professor Howell’s valuation analysis suggests a significant reduction in the value attributed to Serum. With $509 million in claims associated with Serum, her findings propose a reduction of nearly 60% in its assessed worth. As for Oxygen and Maps, the evaluation concludes that their value should be reduced to zero. This stark devaluation stems from the revelation that the bankrupt cryptocurrency exchange held nearly 95% of the tokens associated with both Oxygen and Maps.
Brian D. Glueckenstein, representing FTX as an attorney from Sullivan and Cromwell, emphasizes that customers have assigned values to claims on digital assets based on a hypothetical market scenario that has never materialized and is unlikely to ever exist. This observation underscores the speculative nature of such valuations and the need for a more realistic assessment in the context of the bankruptcy proceedings.
Creditors Challenge Valuation Analysis of “Sam Coins” by NYU Professor in FTX Bankruptcy Hearing
During the proceedings, attorneys representing FTX creditors raised objections to Howell’s valuation methodology, with Maps Vault Attorney Jefferey Torosian describing her assessment of the digital assets’ worth as “illogical.”
🚨A small group of FTX customers are fighting claims by FTX that "Sam Coins" are worthless and are reportedly seeking compensation for the three digital tokens, Serum, MAPS, and OXY. pic.twitter.com/2tFpVDUysL
— CILLIONAIRE.COM (@cillionaire_com) March 27, 2024
Kurt F. Glynne, an attorney representing claims totaling nearly $250 million associated with Oxygen and Maps, went on to criticize the information presented by FTX attorneys, labeling it as “fundamentally flawed.” He further argued, “Her analysis should not be considered credible.”
The intricate path of FTX’s bankruptcy proceedings
The recent FTX hearing closely follows a directive for U.S. Bankruptcy Judge John Dorsey to greenlight the appointment of an independent examiner, Robert J. Cleary. This move aims to probe potential conflicts of interest involving law firm Sullivan and Cromwell concerning the cryptocurrency exchange.
Judge Dorsey’s initial denial of an independent examiner in February 2023 was overturned by a federal appeals court just two months ago. Judge Luis Felipe Restrepo underscored the decision’s significance for the broader cryptocurrency sector, emphasizing its role in subjecting dubious business practices to scrutiny and highlighting undisclosed credit risks in other crypto companies.
John J. Ray III, CEO and leading figure in FTX’s bankruptcy proceedings, had previously opposed the appointment of an independent examiner, citing concerns over excessive costs.
Sam Bankman-Fried will be sentenced tomorrow. During his house arrest, I asked SBF how he felt about the prospect of life in prison.
“If my life ended now, I almost certainly would have done net harm to the world… the fact that I have done net harm weighs enormously on me." pic.twitter.com/0kUcY7GO2n
— Tiffany Fong (@TiffanyFong_) March 27, 2024
Last November, Bankman-Fried faced legal ramifications when he was found guilty of fraud charges. These charges pertained to the alleged misappropriation of more than $8 billion worth of customer funds, purportedly utilized to support Bankman-Fried’s extravagant lifestyle.
In the wake of these legal proceedings, Bankman-Fried’s associates, including close friends and family, have reportedly petitioned U.S. Judge Lewis A. Kaplan, advocating for leniency ahead of Bankman-Fried’s impending sentencing on March 28 in Manhattan federal court.
Amidst these legal entanglements, the cryptocurrency market continues its operations. As of the latest update, Serum is trading at $0.062, while Maps and Oxygen are valued at $0.034 and $0.013, respectively.
