A creditor of the now-bankrupt crypto exchange FTX has tokenized a $31,307 claim as collateral for a DeFi loan on the Arcade platform, marking the first on-chain loan backed by an FTX claim. The claim ownership was represented by a nonfungible token (NFT) and used as collateral for a $7,500 loan to be repaid in five days. In case of payment default, the lender is entitled to the claim.
The transaction demonstrates the tokenization of real-world assets (RWA) and the prominence of asset tokenization in DeFi, where a variety of assets like stocks, government bonds, real estate, and commodities can be tokenized. Found, the bankruptcy claims platform, facilitated the transaction and required both the original creditor and lender to undergo biometric Know Your Customer (KYC) and Anti-Money Laundering (AML) screenings.
Crypto-related bankruptcy cases have surged in the past year, including those of FTX, Genesis Global Trading, and BlockFi, driving the development of on-chain claims solutions like Found and Open Exchange. FTX’s bankruptcy filing has locked billions of dollars in users’ accounts for court proceedings, with claim holders potentially recovering between 35% and 66% of their face value. Found allows users to access loans using bankruptcy claims as collateral, charging a 10% transaction fee on successful trades.
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