FTX Customer Sues Hedge Fund Over Claim Sale

Former FTX customer Alexander Nikolas Gierczyk sold his $1.59 million claim against the bankrupt crypto exchange in November 2023, at a 42% discount to hedge fund Olympus Peak. Gierczyk is now suing Olympus Peak, alleging the firm failed to uphold its end of a deal for additional recovery.

Details of the Case

In a filing made with the United States District Court for the Southern District of New York, Gierczyk claims that Olympus Peak underpaid him. Following a recent approval from U.S. bankruptcy judge John Dorsey on the FTX estate’s reorganization plan, the firm stands to profit significantly from the deal. According to the approved plan, FTX customers could recover between 129% and 146% of their claim values in fiat terms, which could translate to over $1 million profit for Olympus Peak from the claim originally purchased at a discount.

Gierczyk's Claims

Despite selling his claim at a discount, Gierczyk asserts he had an "excess claim provision" in his agreement with Olympus Peak. This provision allowed him to receive additional recoveries at the same rate for any excess distributions arising from the bankruptcy.

Gierczyk's attorneys argue that Olympus Peak made it clear they would not honor this provision, which is central to Gierczyk's lawsuit.

Olympus Peak's Response

Olympus Peak's legal team, Kramer Levin, has stated that the lawsuit is without merit and is based on a misunderstanding of the contract between both parties.

Background on FTX's Bankruptcy

FTX filed for bankruptcy in November 2022. Following this, the exchange's CEO, Sam Bankman-Fried, was convicted of various fraud charges and sentenced to nearly 25 years in prison.

Most creditors in the "dotcom customer entitlement claims" class have voted in favor of the estate's reorganization plan, although some, including Sunil Kavuri, who represents the largest creditor group, criticized the decision to pay out in fiat rather than cryptocurrency.

Updated with a comment from the law firm representing Olympus Peak.