Tokenized FTX claim is used as collateral for a loan

A creditor of now-bankrupted crypto speech FTX pledged a assertion arsenic collateral for a indebtedness successful the decentralized concern (DeFi) protocol Arcade. The transaction was the archetypal on-chain indebtedness backed by a FTX claim, according to the bankruptcy claims level Found.

The assertion worthy $31,307 was tokenized and its ownership represented by a nonfungible token (NFT). The NFT was past utilized connected June 23 arsenic a collateral for a $7,500 indebtedness to beryllium repaid successful 5 days. In the lawsuit of a outgo default, the lender is entitled to the claim.

The transaction is an illustration of real-world assets (RWA) tokenization, successful which a token represents an asset's ownership rights connected a blockchain. Within DeFi, plus tokenization is 1 of the astir salient areas arsenic a wide scope of real-world assets tin beryllium tokenized, including stocks, authorities bonds, existent estate, and commodities.

On Twitter, Found said some the archetypal creditor and lender went done its biometric Know Your Customer (KYC) and Anti-Money Laundering (AML) screenings. According to the company's website, it allows users to entree loans utilizing bankruptcy claims arsenic collaterals nether a 10% transaction interest connected palmy trades.

Crypto speech FTX filed for bankruptcy successful November 2022, locking billions of dollars successful users' accounts for tribunal proceedings. According to immoderate estimates, FTX assertion holders could retrieve betwixt 35% and 66% of their look value.

Crypto-related bankruptcy cases person flooded the courts successful the past year, galore stemming from the illness of FTX, including cases of crypto firms Genesis Global Trading and BlockFi.

The surge successful bankruptcy filings is driving on-chain claims solutions. Found, for example, was launched astatine the opening of this year, portion the co-founders of the collapsed hedge money Three Arrows Capital (3AC) launched the claims trading platform Open Exchange successful April.

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