FTX lawyers counter Jump Trading’s $264 million damages claims

The FTX-Alameda bankruptcy estate challenged Jump Trading subsidiary Tai Mo Shan’s $264 million claim surrounding a loan deal from Alameda Research, where FTX lawyers argued the claim to be invalid as they claim the loan never commenced.

Tai Mo Shan claimed nearly $264 million in damages from Alameda Research’s non-delivery of 800 million Serum (SRM) tokens, from a loan agreement dating back to August 2020. SRM is the native cryptocurrency of FTX-backed decentralized exchange Serum, which collapsed alongside FTX exchange in 2022.

According to the court filings, Jump Trading said it calculated the damages based on an options model, which uses SRM’s market price on the bankruptcy filing date, the token’s implied volatility, the repayment option price and other factors.

FTX lawyers sought the court to disallow this claim, as they said that, primarily, the loan was never delivered by Alameda Research.

"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 said in the court filing. “Nowhere does the Master Loan Agreement provide that Tai Mo Shan can seek to compel Alameda to deliver the cryptocurrency, or seek money damages on a loan that did not commence."

The estate also challenged Jump Trading’s $264 million estimate of damages as “baseless,” arguing that Tai Mo Shan's damages calculation is "wholly unsupportable." Lawyers claimed that Jump’s calculation using the “options model” is vague and does not clearly explain how it landed on the amount of damages. 

FTX’s filing also argued that while Jump estimated the damages based on SRM’s price as of bankruptcy petition date, the loan agreement did not set Tai Mo Shan to receive the tokens on that day but rather in daily installments starting Aug. 1, 2023.

The filing further alleged that Tai Mo Shan may be liable for fraudulent transfer, which FTX lawyers say should be another factor to disallow its claims. "The debtors submit that Tai Mo Shan may have been the recipient of certain constructively fraudulent transfers...including the purported loan at issue here," the filing said.

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