Jump Trading’s Tai Mo Shan says the FTX estate owes it $264 million over a loan involving 800 million SRM that Alameda never delivered.

Lawyers for the estate say this claim is invalid because the loan was never initiated.

The FTX bankruptcy estate is pushing back against a claim by Jump Trading’s subsidiary Tai Ho Shan, which asserts that Alameda didn’t deliver 800 million Serum (SRM) tokens and wants $264 million in damages, but Alameda says that the claim is invalid because the loan never commenced.

SRM was the native token of the decentralized exchange (DEX) Serum. Jump Trading announced in the fall of 2020 that it had made a significant investment in Serum and would provide market making services.

The DEX collapsed after FTX went bankrupt in November 2022, and at the time, insiders told CoinDesk that the exchange was decentralized in name only as orders came from FTX.

Market data shows that the 800 million SRM tokens would account for approximately 80% of the roughly 1 billion SRM in existence and more than the 372.7 million current circulating supply.

The token was scheduled to have a max supply of over 10.1 billion tokens, but this was cut short due to its demise in 2022.

In court documents, Jump Trading argued that the FTX-Alameda estate owes it more than $264 million in damages based on an options model.

The options model uses the market price of SRM on the bankruptcy filing date, the repayment option price, SRM’s implied volatility, and the interest rate on the loan, among other factors.

In its heyday, SRM was once one of the shining stars in the constellation of coins backed by Sam Bankman-Fried’s former FTX-Alameda, and partners.

SRM peaked at just over $12.50 in September 2021, with $1.2 billion in trading volume, according to CoinDesk Indices data.

Its nearly unprecedented surge in 2021 minted millionaires at the exchange, which eventually annoyed Bankman-Fried, according to the book Going Infinite, because he feared these newly wealthy employees weren’t interested in long hours.

Now, market data shows that SRM is worth approximately 3 cents.

In court documents, the FTX-Alameda bankruptcy estate argued that the loan agreement was never fulfilled because Alameda did not deliver the SRM tokens as specified.

“It is undisputed that Alameda failed to deliver the cryptocurrency contemplated by the Loan Confirmation to the Master Loan Agreement. The loan therefore did not commence,” lawyers for the FTX-Alameda estate wrote. “The Master Loan Agreement gives Tai Mo Shan one remedy when a loan does not commence: voiding the applicable Loan Confirmation.”

The estate challenged the valuation amount presented by Jump, arguing that Tai Mo Shan’s damages calculation is “wholly unsupportable” and based on a flawed “options model” though it did not provide an explanation or documentation to support this.

Lawyers for FTX estate also alleged that Tai Mo Shan might have engaged in fraudulent transfers.

“For the reasons stated here and more following discovery, Tai Mo Shan may be liable to the Debtors for fraudulent transfers,” court filings read. “The debtors submit that Tai Mo Shan may have been the recipient of certain constructively fraudulent transfers…including the purported loan at issue here.”

The lawyers also argue that the Master Loan Agreement and Loan Confirmation provide that Tai Mo Shan would receive 800 million SRM tokens for no fee and no interest, which is questionable.

“There are no contract provisions specifying any amount of collateral or consideration given by Tai Mo Shan in return for the alleged loan,” they write.