FTX Creditor Reveals 20% to 30% Arbitrage Opportunities Amid Debt Market Shifts

In a recent interview, a major creditor of FTX, known by the handle Will (@zhetengji), revealed significant insights into the dynamics surrounding the handling of FTX's debt. According to Will, the process of debt acquisition by third-party institutions has led to a shift in the eligibility criteria for compensation, with the original country of ownership no longer being a determining factor. This change has prompted some creditors to consider selling their debt to addresses with regulatory compliance qualifications.

However, the interview also shed light on the role of certain intermediaries, often referred to as "debt agents," who are actively involved in the process. These agents, a considerable number of whom are based in China, have been accused of creating panic and anxiety within the community. Their tactics, which include spreading fear and uncertainty, have resulted in a suppression of debt prices. This environment of anxiety has forced many creditors, who were already anxious, to sell their debt at significantly lower prices.

Will estimated that the arbitrage opportunities in this scenario could be as high as 20% to 30%. This estimation is based on the fact that in FTX's bankruptcy settlement, the debt is calculated with an annual accumulation of 9% interest. Therefore, the final amount to be recovered depends on both the time dimension and the scale of asset recovery. This revelation highlights the potential for significant financial gains for those who can navigate the complexities of the debt market during this period.