Crypto exchanges FTX, BlockFi, Genesis, Celsius, and Voyager all declared bankruptcy, leaving billions in deposits inaccessible for depositors and potentially gone forever as the bankruptcy settlement process plays out in courts. For many, getting anything in return now (even pennies on the dollar) delivers more peace of mind by avoiding the process of the courts determining where in line you fall in a crowded sea of people looking to recover funds from a bankrupt organization. XClaim is a marketplace where those with depositor claims (essentially creditors) in bankrupt businesses can match with buyers that will offer near-instantaneous cash settlements. The company offers real-time market values of claims where buyers and sellers can transact in a secure environment with quick settlements. For example, Genesis claims are yielding 52.5% of the total claim amount presently while BlockFi deposits are trading at an 82% discount of offering 18% of the total value. Xclaim offers free consultations with claim holder advocates to ensure that creditors are maximizing the value of their holdings and the platform handles all facets of the process from pricing to the negotiated agreements that cover the underlying sales of claims.
LA TechWatch caught up with Xclaim CEO and Founder Matthew Sedigh to learn more about the business, the company’s strategic plans, latest round of funding, which brings the company’s total funding raised to approximately $12M, and much, much more…
Who were your investors and how much did you raise?
$7M Series A, led by Josh Jones.
Tell us about your product or service.
Xclaim is a financial exchange for the 15 million crypto investors with nearly $40 billion of funds locked up by the bankruptcies of FTX, Celsius, Genesis and several others. We provide a market for these parties to negotiate a settlement for immediate cash instead of waiting several years to recover a fraction of their funds.
What inspired the start of Xclaim?
I witnessed how people that were owed money from bankrupt businesses were being forced to wait for years through an arcane process and without much of a voice to make a difference. I thought that was unnecessary and contrary to the idea of a transparent and efficient market. In the crypto bankruptcies this issue is even more pronounced. You have 15 million people globally all dealing with the same issue but not one of them can do anything without hiring expensive lawyers to fight a long uphill battle to get their money back.
How is it different?
Our competitors exist primarily offline. We are the only platform with an end-to-end online experience for sourcing, negotiating, documenting, settling and recording these transactions.
What market you are targeting and how big is it?
Today there is more than $1 trillion of tradable bankruptcy claims in the broader market.
What’s your business model?
We charge trading commissions and other service fees from buyers and sellers.
How are you preparing for a potential economic slowdown?
Xclaim is a counter-cyclical business that becomes more in-demand as the economy slows.
What was the funding process like?
Challenging. Xclaim had to reposition itself for the crypto space after finding limited traction in the general bankruptcy claims market since originally launching two years earlier. We were fortunate to attract investors that understood that we were now in the right place at the right time.
What are the biggest challenges that you faced while raising capital?
Other than venture generally slowing down and wary of all new investments, we had underperformed for two years and were asking for renewed faith in our ability to achieve our goals of becoming the de facto destination for this market.
What factors about your business led your investors to write the check?
We’ve been able to prove that our industry can evolve and these assets can trade electronically. That was our innovation. Now it’s about scaling it. We were also positioned absolutely perfectly at the exact right time.
What are the milestones you plan to achieve in the next six months?
We are planning to launch new standardized products that enhance the liquidity of these assets and make it easier for other market participants to engage more easily.
We are planning to launch new standardized products that enhance the liquidity of these assets and make it easier for other market participants to engage more easily.
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
Adjust your operations as if no more external funding is ever coming. Cut costs, renegotiate contracts, create incentives for vendors and consider more performance-based employee compensation.
Where do you see the company going now over the near term?
With the successful fundraise we have the capital to expand our offerings by securing our broker-dealer license. This will allow us to innovate new products and services to maximize liquidity in our market. We also intend to launch a market-making affiliate that can inject capital into the market and make trades happen more seamlessly.
What’s your favorite coffee shop or location to hold a meeting?
A walking meeting along the beach will always close the deal.
