FTX’s bankruptcy court challenges a claim by Jump Trading’s subsidiary, Tai Ho Shan, over an alleged unfulfilled loan of 800 million Serum (SRM) tokens. Tai Ho Shan demands $264 million in compensation, but Alameda contends the loan never commenced.
Investment Background
SRM is the native token of the decentralised exchange (DEX) Serum. In late 2020, Jump Trading announced a significant investment in Serum, intending to provide market-making services.
Collapse of DEX
Following FTX’s bankruptcy in November 2022, the DEX collapsed. Industry insiders revealed the exchange was only nominally decentralised, with orders primarily from FTX.
Token Supply Analysis
Market data indicates that the 800 million SRM tokens in question comprise 80% of the existing 1 billion SRM supply, vastly exceeding the current circulating supply of 372.7 million tokens. The total maximum supply of SRM is estimated at over 10.1 billion tokens, reduced due to the 2022 downfall.
Jump Trading’s Claim
Jump Trading argues, using an options model, that FTX-Alameda’s balance sheet owes it more than $264 million. This model considers SRM’s market price at the bankruptcy filing date, the repayment option price, SRM’s implied volatility, and loan interest rates.
Historical Context
During its peak, SRM was a prominent token within the constellation supported by Sam Bankman-Fried’s former FTX-Alameda. In September 2021, SRM peaked at over $12.50 with a trading volume of $1.2 billion. However, it now trades around 3 cents.
Court Filings
The FTX-Alameda estate asserts the loan agreement never took effect because Alameda did not deliver the SRM tokens. Lawyers state, “Alameda failed to deliver the cryptocurrency envisioned in the Loan Confirmation, so the loan never commenced.” They argue Tai Mo Shan's damage calculations lack foundation and rely on a flawed “options model” without supporting documentation.
Fraud Allegations
The estate's lawyers also accuse Tai Mo Shan of potentially fraudulent transfers. They state, “For reasons stated in this case and further investigation, Tai Mo Shan may be liable to the debtors for fraudulent transfers. Tai Mo Shan may have accepted certain constructive fraudulent transfers, including the purported loan in question.”
Questionable Loan Terms
Furthermore, the loan agreement purportedly allowed Tai Mo Shan to receive 800 million SRM tokens without any fees or interest, which the estate’s lawyers find suspicious. “The contract terms do not specify any collateral or consideration provided by Tai Mo Shan for the purported loan,” they conclude.
Hidden dangers of decentralized financial transactions
FTX challenges Jump Trading's $264 million claim over an unfulfilled SRM token loan, citing non-delivery and potential fraudulent transfer issues.
This dispute reveals the complexities and potential legal issues inherent in decentralised finance transactions.
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