Key Takeaways
- FTX is pushing for a zero valuation on cryptocurrencies linked to Sam Bankman-Fried in bankruptcy court.
- The firm's valuation expert argues that due to FTX's dominant ownership, liquidating the assets would be nearly impossible, supporting the push for zero valuation.
- Despite FTX's stance, holders of the affected tokens dispute the proposed devaluation.
At a court session on March 26, representatives for FTX suggested to Delaware bankruptcy court Judge John Dorsey that certain cryptocurrencies linked to founder Sam Bankman-Fried have no real value.
Brian Glueckstein, an attorney for FTX, specifically targeted Maps (MAPS), Oxygen (OXY), Serum (SRM), and Boba (BOBA), also called "Sam Coins," suggesting these digital assets should either be significantly devalued or dropped to zero.
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Glueckstein argued that the valuation of these tokens is rooted in a hypothetical market and, therefore, is unrealistic.
His argument was based on an analysis by Sabrina Howell, FTX's valuation expert. Howell noted that the company holds more than 95% of the maximum supply of OXY and MAP tokens, suggesting it would take decades to liquidate them. This formed the basis for advocating that the claims of these tokens, valued at over $600 million, have no worth.
Similarly, claims of SRM tokens, amounting to $509 million, were recommended for a 58% devaluation.
However, holders of these "Sam Coins" have countered FTX's valuation, insisting their combined worth exceeds $1.1 billion.
Judge Dorsey has yet to decide on the matter, reflecting on arguments from both sides. He addressed the inherent complexity of crypto valuation and remarked:
The only value is derived from the trades themselves. As far as I can tell, cryptocurrency trades on sentiment and nothing else.
Sam Bankman-Fried, once at the helm of FTX, faces a potential 50-year prison sentence following his conviction on multiple fraud charges. His legal team has contended that this characterization is excessively harsh and has requested a reduced sentence. The sentencing is set for March 28.
As FTX navigates through its bankruptcy proceedings, the debate over the valuation of cryptocurrencies closely tied to its disgraced founder underscores the broader challenges of assessing digital asset worth.
