Serum price tumbles as Jump Trading takes FTX Estate to court over SRM token loan

The price of Serum (SRM) has plummeted nearly 8% amidst a brewing court battle between Jump Trading’s subsidiary, Tai Mo Shan, and the FTX bankruptcy estate.

The dispute between Tai Mo Shan and FTX bankruptcy estate centers around an unresolved loan agreement involving a massive 800 million SRM tokens, a transaction that has now become a focal point in the ongoing fallout from FTX’s collapse.

Jump Trading’s Tai Mo Shan seeking $264M in damages

Jump Trading’s Tai Mo Shan is seeking approximately $264 million in damages from the FTX estate, claiming that Alameda Research, a former trading partner of FTX, failed to deliver the agreed-upon SRM tokens.

The loan was intended to support Serum, a decentralized exchange (DEX) that was prominently backed by FTX. However, with the collapse of FTX in November 2022, the loan was never fulfilled, igniting a legal confrontation.

According to court documents, the loan agreement stipulated that Alameda Research would deliver 800 million SRM tokens to Tai Mo Shan. This quantity represents about 80% of the total SRM supply and is significantly more than the 372.7 million SRM currently in circulation according to market data.

Jump Trading’s claim is based on an options model that calculates damages using the market price of SRM at the time of FTX’s bankruptcy filing, alongside other financial metrics.

FTX bankruptcy estate claims the SRM token loan wasn’t executed

However, the FTX estate has vehemently contested this claim, arguing that the loan agreement was never executed because the SRM tokens were never delivered.

FTX’s legal team contends that, since the tokens were not provided, the loan never commenced under the terms of the Master Loan Agreement, which allows for nullification if the loan does not begin.

FTX’s attorneys have also raised concerns about the possibility of fraudulent transfers, suggesting that Tai Mo Shan could be liable for such actions.

They argue that the terms of the loan, which involved providing SRM tokens without any associated fee or interest, might imply questionable financial practices.

The estate’s lawyers have called the valuation model used by Jump Trading “wholly unsupportable” and flawed, although they have yet to provide detailed documentation supporting their claims.

The collapse of Serum decentralized exchange

This legal dispute is emblematic of the broader chaos that has engulfed the cryptocurrency sector following FTX’s downfall.

The collapse of Serum, a decentralized exchange that was largely controlled by FTX, highlights the precarious nature of the crypto market and the far-reaching consequences of the exchange’s bankruptcy.

As the case unfolds, the SRM token’s value continues to be affected by the uncertainty surrounding its legal and financial entanglements.

Market data shows a significant drop in SRM’s price, reflecting investor concern and market volatility linked to the ongoing legal issues.

The SRM token, which was once a high-flying asset, peaking at over $12.50 in September 2021, has since tumbled to approximately $0.03147 at press time, reflecting a 65% decline over the past year.

The outcome of this case could have far-reaching implications for the future of Serum’s native token, SRM.

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