Quick Look:
- CoinShares recovered £31.32 million from its FTX claim, 116% of the original £26.6 million.
- FTX plans to repay $14.5-$16.3 billion using FTT tokens to compensate affected users.
- FTT’s value dropped from $25.43 to $1.43 post-collapse, aiming for a gradual recovery.
- Sam Bankman-Fried received a 25-year prison sentence for defrauding investors.
CoinShares International is a leading player in the digital assets investment industry headquartered in Europe. It has recently achieved a significant milestone. On 24th June 2024, the company announced the successful sale of its claim against the now-defunct cryptocurrency exchange FTX. Moreover, this sale resulted in an impressive recovery rate of 116% net of broker fees. Therefore amounting to a substantial £31.32 million. The original claim stood at £26.6 million, making this recovery a notable achievement for CoinShares.
The CEO of CoinShares, Jean-Marie Mognetti, highlighted the diligence and expertise of the company’s team in navigating the complexities of the FTX situation. This exceptional recovery rate underscores CoinShares’ commitment to its shareholders and the broader digital asset industry. The financial windfall will enable CoinShares to bolster its financial standing, provide substantial benefits to its shareholders, enhance client services, and reinvest in growth opportunities, thereby driving further innovation within the sector.
FTX Repayment Plan: $14.5B to $16.3B Compensation
FTX, once a prominent name in the cryptocurrency exchange market, faced a severe liquidity crisis in November 2022, leading to its collapse. The repercussions were widespread, affecting numerous companies, including CoinShares. FTX has devised a repayment strategy to compensate affected users with a total sum between $14.5 billion and $16.3 billion. The plan involves utilising FTT tokens held in reserve, releasing them gradually to avoid significant market disruption, restore user trust, and maintain the platform’s reputation.
FTT Token Value Recovery and Expert Analysis
The long-term effects of this strategy will impact the value and utility of FTT tokens positively. Experts view this repayment approach as a strong step towards demonstrating financial responsibility. FTT’s market performance has seen considerable fluctuations; before the collapse, it was valued at $25.43 in October 2022, plummeting to $1.62 in November 2022, and currently stands at $1.43. At its peak in September 2021, FTT reached $72.81. The repayment initiative is expected to recover the token’s value gradually.
Sam Bankman-Fried’s 25-Year Sentence and FTX’s Future
The legal fallout from FTX’s collapse culminated in the conviction of co-founder Sam Bankman-Fried in March 2024. Bankman-Fried received a 25-year sentence for defrauding investors of over $1.7 billion. Despite these challenges, the founders’ initial vision for FTT, launched in 2019, included benefits such as reduced trading fees, participation in the FTX insurance fund, and staking rewards. The financial instability in November 2022, exacerbated by $5.76 billion in FTT tokens locked or used as collateral by Alameda, has not deterred experts from recognising the potential for substantial growth, provided FTX manages the repayment process effectively.
CoinShares’ $21.7M Deficit from Terra (LUNA) Collapse
The broader cryptocurrency market faced additional turbulence in May 2022 with the collapse of Terra (LUNA). The algorithmic stablecoin TerraUST debugged from the US dollar, causing a ripple effect across the crypto landscape. CoinShares, like many others, was affected, recording a deficit of $21.7 million in the second quarter of 2022 due to exposure to Terra (LUNA). Nevertheless, CoinShares assured its shareholders of its financial resilience, emphasising that it had ample funds to continue operations.
