The post Californian Investor Sues Hedge Fund Over FTX Bankruptcy Claim Payout appeared on BitcoinEthereumNews.com.

The lawsuit stems from a deal struck last year in […] The lawsuit stems from a deal struck last year in which Gierczyk sold his claim to Olympus Peak at a 42% discount, receiving a payout of $930,000. The deal is typical of many in the crypto space in recent years, where investors have unlocked the value of frozen accounts on FTX, BlockFi, Celsius and Voyager for cash payouts. The upside for the account seller is that they avoid a painstakingly slow and uncertain bankruptcy process and get at least a percentage of their funds back. On the other side of the equation, the account buyer accepts the risk and hopes for an upside in regards to the eventual payout when the bankruptcy runs its course.However, recent developments in the FTX bankruptcy proceedings have significantly altered the potential value of such claims. A US Bankruptcy Judge recently approved FTX’s reorganization plan, which aims to repay customers with claims of $50,000 or less between 129% and 146% of their original value. This unexpected surge in potential payouts has prompted Gierczyk to seek legal redress – essentially ‘have his cake and eat it too.’ Gierczyk contends that Olympus Peak stands to reap a substantial profit, potentially exceeding $1 million, from his claim due to the significantly improved repayment terms. He asserts that the hedge fund has declined to honor a provision in their agreement concerning additional recovery rights, which he believes entitles him to a larger portion of the eventual payout.  What Is An Excess Claim Provision The lawsuit, filed in Manhattan federal court, accuses Olympus Peak of breaching their purchase agreement and demands supplementary compensation for Gierczyk. Gierczyk’s legal representatives emphasized in the lawsuit that he agreed to the initial sale only because the purchase agreement included a clause explicitly granting…

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Filed under: News - @ October 13, 2024 9:24 am