Nikolas Gierczyk, an FTX user from California, has filed a lawsuit against the hedge fund Olympus Peak, which purchased his claims from FTX, alleging that the firm has unlawfully withheld profits from his bankruptcy recovery.
Gierczyk’s complaint, lodged on October 10 in the US federal court in Manhattan, claims that Olympus Peak’s actions violated their agreement, preventing him from receiving additional funds that he was entitled to as part of the bankruptcy process. This legal action arises amid FTX’s ongoing restructuring efforts following its high-profile bankruptcy.
In the details of the lawsuit, Gierczyk alleges that he sold his claim against FTX, valued at $1.59 million, to Olympus Peak at a 42% discount, resulting in a payout of $930,000. The lawsuit highlights that the hedge fund stands to gain significantly from the bankruptcy process, potentially making over $1 million in profits from Gierczyk’s claims alone.
Gierczyk contends that Olympus Peak had committed to sharing any excess distributions from the bankruptcy but has since indicated that it will not honor this agreement.
FTX User Files Lawsuit Against Olympus Peak for Withholding Bankruptcy Profits
The backdrop to this lawsuit is the recent approval of FTX’s reorganization plan by the US Bankruptcy Court, which aims to return between 129% and 146% of creditor claim values.
This approval marks a significant step in the recovery process for FTX’s creditors, with the potential for Olympus Peak to receive between $2 million and $2.3 million from Gierczyk’s claims. As the situation develops, the court’s approval indicates that many FTX customers could see higher payouts than previously anticipated.
The lengthy proceedings of the FTX bankruptcy case have involved extensive legal and financial negotiations since the company declared insolvency in 2022. The approval of the reorganization plan by John J. Ray III, the appointed CEO for FTX, was celebrated as a crucial move toward compensating creditors fully.
Ray noted that the plan represents “the largest and most complex bankruptcy estate asset distribution in history,” although it does not account for any asset appreciation between November 2022 and 2024, which has been a point of contention among creditors.
In the wake of FTX’s bankruptcy, many users opted to sell their claims to hedge funds rather than wait for prolonged bankruptcy proceedings to conclude.
Reports indicate that over $600 million worth of FTX claims were sold in the marketplace, with various hedge funds and investors acquiring claims from multiple bankrupt entities, including Voyager Digital and Celsius Network. This trend reflects a broader strategy by users to secure immediate liquidity instead of risking extended recovery times through traditional bankruptcy processes.
