Key Takeaways:
- Tai Ho Shan, a Jump Trading subsidiary, is suing the FTX bankruptcy estate for $264 million
- Tai Ho Shan claims that Alameda Research failed to deliver 800 million Serum (SRM) tokens.
Tai Ho Shan, a subsidiary of Jump Trading, has initiated legal action to recover $264 million from the FTX bankruptcy estate, alleging that Alameda Research failed to provide 800 million Serum (SRM) tokens as stipulated in a prior loan agreement.
In the fall of 2020, Jump Trading announced a substantial investment in Serum, a decentralized exchange (DEX), and committed to providing market-making services.
Tai Ho Shan’s claim is rooted in a loan agreement where Alameda Research was supposed to deliver 800 million SRM tokens. This number represents a significant portion—approximately 80%—of the total existing SRM supply of about 1 billion tokens.
However, the maximum intended supply of SRM was never reached, as the token was discontinued in 2022.
Jump Trading’s legal team has calculated the damages using an options model, which factors in SRM’s market price on the bankruptcy filing date, the token’s implied volatility, the repayment option price, and other relevant variables. Based on this model, the subsidiary seeks $264 million in damages.
FTX’s lawyers, however, have challenged this claim. They argue that Alameda Research never delivered the loan, meaning the loan agreement did not formally commence.
“It is undisputed that Alameda failed to deliver the cryptocurrency contemplated by the Loan Confirmation to the Master Loan Agreement. The loan therefore did not commence,” the FTX estate lawyers stated in court filings.
They also noted that the Master Loan Agreement does not provide a basis for Tai Mo Shan to compel delivery of the cryptocurrency or seek monetary damages for an uninitiated loan.
Furthermore, FTX’s legal team has criticized Jump Trading’s valuation methodology, describing the damages calculation as “wholly unsupportable” and based on a flawed options model.
They also pointed out that the loan agreement set the token delivery to begin in daily installments starting August 1, 2023, not on the bankruptcy filing date.
Adding another layer of complexity, FTX’s filings suggest that Tai Mo Shan might be liable for fraudulent transfer, which could further undermine its claims.
