Former FTX Customer Sues Hedge Fund, Says It Reneged on Bankruptcy Payout Deal

As a seasoned crypto investor who has navigated through the rollercoaster ride of the cryptosphere for over a decade now, I find myself standing on the sidelines, watching the latest development between FTX customers and hedge funds with a mix of disbelief and a touch of cynicism.

A California-based former customer of FTX is suing hedge fund Olympus Peak alleging that the firm’s bankruptcy claims purchasing desk has withheld promised payments on a claim he sold to it.

In court documents submitted to the U.S. District Court Southern District Of New York, Alexander Nikolas Gierczyk admits he negotiated a deal to transfer a FTX bankruptcy claim worth $1.59 million at a 42% reduction to Olympus Peak Trade Claims Opportunities Fund. This deal also included an “extra claim provision.” (This version tries to simplify the language and make it more accessible for non-legal readers, but still maintains the essence of the original statement.)

Under this arrangement, if the claim is eventually approved and the final amount exceeds the original claim amount, the buyer will acquire that excess amount by making a payment equal to the excess amount multiplied by the purchase rate.

As per my analysis, I found that Gierczyk consented to the sale on condition that “the contract explicitly granted him an extra compensation if his claim was settled beyond its face value during the bankruptcy process,” as stated in the documents.

According to Gierczyk’s lawyers’ filing, the latest FTX disclosure statement indicates that claims like his could potentially receive up to 146% of their worth in distributions. However, they claim, Olympus Peak has stated explicitly that they will not honor their part of the agreement.

In their correspondence, an Olympus Peak representative expressed their disagreement with Gierczyk’s assertion that they still hold any financial stake in the claim.

Olympus Peak did not immediately respond to a request for comment from CoinDesk.

Initially, during FTX’s bankruptcy proceedings, claims were being valued at approximately 13 cents for every dollar on various marketplaces specializing in bankruptcy cases.

Bloomberg reported on the case earlier.