📣 Twice Betrayed: FTX Client Takes Hedge Fund to Court
posted 11 Oct 2024
According to Bloomberg, former FTX user Nikolas Gierczyk has filed a lawsuit against the hedge fund Olympus Peak, which specializes in trading distressed debt claims.
He had sold his FTX claims to the hedge fund at a 42% discount, totaling $1.59 million. The arrangement appeared beneficial to both parties: Gerchik received cash (which he likely thought was long gone when FTX collapsed), and the hedge fund stood to profit from any recovery after the liquidation was finalized.
However, the lengthy saga surrounding Curly Sam’s bankrupt exchange has opened up the possibility of additional gains for Gerchik. The reorganization plan suggests that affected clients could receive compensation between 129% and 146%.
Related: Ex-Mobster Shares His Take on SBF
This led Gerchik to assert that Olympus Peak had additional recovery obligations under the agreement’s compensation clause. Olympus Peak, however, has made it clear that they have no intention of fulfilling that part of the contract.
Hedge funds purchase claims at a discount, providing immediate liquidity to sellers. By the time the bankruptcy process concludes, these deals often yield significant returns—sometimes leaving former claim holders unhappy.
Future payouts to FTX creditors could provide a considerable boost to the crypto market. Experts suggest that a large portion of the multi-billion dollar compensations might flow back into digital assets.
We’ve also reported that the U.S. Bankruptcy Court released a full creditor list for FTX. The document spans over 110 pages.
Some unexpected names made it to the list, including a pest control firm and a garden center.
Gerchik alleges that Olympus Peak failed to fulfill their financial obligations in connection with a previous agreement.
He had sold his FTX claims to the hedge fund at a 42% discount, totaling $1.59 million. The arrangement appeared beneficial to both parties: Gerchik received cash (which he likely thought was long gone when FTX collapsed), and the hedge fund stood to profit from any recovery after the liquidation was finalized.
However, the lengthy saga surrounding Curly Sam’s bankrupt exchange has opened up the possibility of additional gains for Gerchik. The reorganization plan suggests that affected clients could receive compensation between 129% and 146%.
Related: Ex-Mobster Shares His Take on SBF
This led Gerchik to assert that Olympus Peak had additional recovery obligations under the agreement’s compensation clause. Olympus Peak, however, has made it clear that they have no intention of fulfilling that part of the contract.
Olympus Peak is offering to buy your debt claims directly through their site. Source: opeaklp.com
This new legal battle sheds light on the “hidden risks” of trading distressed assets.
Hedge funds purchase claims at a discount, providing immediate liquidity to sellers. By the time the bankruptcy process concludes, these deals often yield significant returns—sometimes leaving former claim holders unhappy.
Future payouts to FTX creditors could provide a considerable boost to the crypto market. Experts suggest that a large portion of the multi-billion dollar compensations might flow back into digital assets.
We’ve also reported that the U.S. Bankruptcy Court released a full creditor list for FTX. The document spans over 110 pages.
Some unexpected names made it to the list, including a pest control firm and a garden center.
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