FTX Lawyers Counter Jump Trading’s $264M Damages Claims

FTX Jump trading dispute
FTX Lawyers Counter Jump Trading’s $264M Damages Claims

NAIROBI (CoinChapter.com)— In the ongoing saga of FTX’s bankruptcy proceedings, lawyers for the defunct crypto exchange have contested a $264 million claim by Jump Trading subsidiary Tai Mo Shan, centered around an alleged loan agreement with Alameda Research that reportedly never took off. FTX representatives maintain that the transaction never materialized.

Tai Mo Shan lodged a claim for nearly $264 million in damages, alleging that Alameda Research did not receive 800 million Serum (SRM) tokens under a loan deal dated August 2020.

SRM serves as the native token of the FTX-supported decentralized exchange, Serum, which also fell into oblivion following FTX’s collapse in 2022. Despite these allegations, FTX representatives maintain that the transaction never materialized.

FTX Jump trading dispute
Legal document disputing Tai Mo Shan’s $264M claim. Source: US Bankruptcy Court, District of Delaware.

FTX’s legal team argued that the core issue in this dispute is Alameda Research’s failure to deliver SRM tokens as required by the Loan Confirmation under the Master Loan Agreement.

The assertion highlights a fundamental disagreement over the loan’s very existence, with FTX lawyers arguing that there is no ground to demand damages for a transaction that never occurred.

Jump Trading’s Calculation Method Under Scrutiny

The method Jump Trading used to quantify the damages has come under fire. Calculated based on SRM’s market value at the time of FTX’s bankruptcy, including implied volatility and other derivatives, FTX lawyers label this estimate as ‘wholly unsupportable.’

They argue that the options model used lacks transparency and fails to substantiate the hefty damage claim.

FTX Jump trading dispute
FTX disputes Jump Trading’s $264M claim over SRM tokens.

Moreover, the defunct crypto exchange challenged the timing of the token delivery stipulated in the loan agreement. It was supposed to commence in daily installments starting from August 1, 2023, not as a lump sum on the date of bankruptcy.

The move further complicates Tai Mo Shan’s claims, suggesting potential discrepancies in the contractual obligations.

Furthermore, FTX’s filing suggests that Tai Mo Shan might have been involved in constructively fraudulent transfers concerning the disputed loan. This allegation introduces another layer of complexity, potentially affecting the legitimacy of the claim.

FTX Creditors Voting on Liquidation Plan

Meanwhile, FTX creditors have started voting on a liquidation plan for compensation to exchange customers. They have until Aug. 16 to cast their votes. The exchange aims to receive final approval for the liquidation plan in October this year.

The legal dispute highlights the complexities and challenges faced by the FTX bankruptcy estate as it navigates numerous claims and attempts to maximize recoveries for creditors. The outcome of this case will likely have significant implications for other claims against the estate.

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