Jump Trading Drags FTX Estate to Court Over $264M Serum Token Loan

As a crypto investor with some experience under my belt, I’ve seen my fair share of twists and turns in this volatile market. The ongoing legal battle between Jump Trading’s subsidiary Tai Ho Shan and the FTX-Alameda bankruptcy estate over an alleged $264 million loan involving 800 million SRM tokens is yet another intriguing development that has caught my attention.

As a researcher examining this situation, I would describe it as follows: The FTX bankruptcy estate is challenging Jump Trading’s subsidiary, Tai Ho Shan’s allegation of a missing $800 million worth of Serum (SRM) tokens and their demand for $264 million in damages. However, Alameda, the entity accused of not delivering the tokens, argues that the claim is void because the loan transaction between the two parties never actually began.

As an analyst, I’d put it this way: In the autumn of 2020, Jump Trading revealed their substantial investment in the decentralized exchange (DEX), Serum, where SRM is the native token. They further declared their intention to offer market making services.

In November 2022, FTX filed for bankruptcy, leading to the downfall of the supposedly decentralized DEX (Decentralized Exchange). Insiders revealed to CoinDesk that this exchange was in fact centralized in nature as it heavily relied on orders originating from FTX.

As an analyst, I’ve examined market data and found that around 800 million SRM tokens represent around 80% of the total 1 billion SRM in circulation. This is greater than the existing circulating supply of 372.7 million SRM.

As a researcher studying the history of digital currencies, I came across a particular token that was initially planned to issue over 10.1 billion units. However, unfortunate events leading to its downfall in the year 2022 prevented this maximum supply from being reached.

In the legal papers filed for the case, Jump Trading contended that the FTX-Alameda estate owes them over $264 million in compensation according to a options valuation method.

As a researcher studying the options model, I can explain that this model takes into account several key elements when determining the value of a credit option linked to a security like SRM (Superior Energy Services). Among these factors are:

During its prime, SRM stood out as a brilliant coin among the collection aligned with Sam Bankman-Fried’s previous partnership between FTX and Alameda.

In September 2021, the price of Synthetix Network Token (SRM) reached a high of approximately $12.50, and there was around $1.2 billion worth of trades executed on this cryptocurrency, as indicated by CoinDesk Indices statistics.

The unprecedented growth of the exchange in 2021 created millions of dollar-made individuals, a development that displeased Bankman-Fried as per the book “Going Infinite,” due to his concern that their newfound wealth might diminish their motivation for putting in long hours.

Now, market data shows that SRM is worth approximately 3 cents.

In the court filings related to FTX and Alameda’s bankruptcy proceedings, it was contended by the estate that Alameda failed to meet the terms of the loan agreement since they didn’t transfer the required SRM tokens as per the contract.

According to the legal team representing the FTX-Alameda estate, it is indisputable that Alameda failed to transfer the agreed-upon cryptocurrency as per the Loan Confirmation in the Master Loan Agreement. Consequently, the loan did not initiate. The Master Loan Agreement grants Tai Mo Shan a single option when a loan doesn’t start: invalidating the relevant Loan Confirmation.

The estate disputed Jump’s proposed valuation figure for Tai Mo Shan’s damages, asserting that the method used was entirely unsustainable and relied on a faulty “options pricing model.” However, they failed to offer any alternative evidence or justification to back up their claim.

Lawyers for FTX estate also alleged that Tai Mo Shan might have engaged in fraudulent transfers.

Based on the information presented in the court filings, it is proposed that Tai Mo Shan could be held accountable for potentially fraudulent transfers towards the Debtors. The Debtors argue that certain transactions involving Tai Mo Shan, including the questioned loan, may have been constructively fraudulent.

The attorneys contend that the Master Loan Agreement and Loan Confirmation stipulate that Tai Mo Shan will receive 800 million SRM tokens free of charge and without accruing any interest, which raises doubts.

In their words, there is no mention of any agreed-upon collateral or compensation provided by Tai Mo Shan as part of the reported loan transaction.