FTX Preferred Shares Attract Risk-Takers Amid Bankruptcy
A handful of bold investors are seeking to acquire preferred shares of the defunct crypto exchange FTX, drawn by the rising value of assets held for compensation despite almost nonexistent prospects for payouts. Preferred creditors rank at the very bottom of the payout hierarchy in bankruptcy proceedings.
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A handful of bold investors are seeking to acquire preferred shares of the defunct crypto exchange FTX, drawn by the rising value of assets held for compensation despite almost nonexistent prospects for payouts. Preferred creditors rank at the very bottom of the payout hierarchy in bankruptcy proceedings.
These investors are gambling on the possibility of profit, anticipating further funds that might be discovered by FTX's current management. Their gamble is partly inspired by the passive increase in the value of cryptocurrencies such as Bitcoin, Ethereum, and Solana, which are included in the compensation fund.
Additionally, the value of claims against FTX has surged to 90 cents on the dollar, indicating a high level of investor confidence in the full restitution of assets to creditors. Nonetheless, FTX's current administration and the U.S. bankruptcy special representative have refrained from commenting on this situation.
John Reed Stark, a former SEC official, previously labeled the efforts to restart the FTX platform by its management and legal teams as a pure scam, claiming it was an unrealistic goal that nonetheless resulted in legal fees amounting to an estimated $250 million.
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