Investors Bet on FTX Bankruptcy Claims, Hoping for Recovery
Investors are spending hundreds of millions of dollars on FTX bankruptcy claims, betting that the firm’s new leaders will recover the money that Sam Bankman-Fried misappropriated.
Profiting from FTX’s Downfall
After the FTX cryptocurrency exchange filed for bankruptcy last year, Thomas Braziel, an investor who specializes in collapsed businesses, started brokering an unusual kind of transaction: a market to profit from FTX’s downfall.
Mr. Braziel put one of his clients in touch with a large financial firm that had lost nearly $100 million when FTX went under. Last December, the firm agreed to sell its claim in the FTX bankruptcy — essentially an i.o.u. from the collapsed exchange — for 6 cents on the dollar, betting that it was better to collect some fast cash than wait years for the husk of FTX to start paying creditors back.
Then the market for FTX claims exploded. Mr. Braziel recently brokered the sale of a $19 million FTX claim for 68 cents on the dollar, collecting a nearly $100,000 commission, he said. Some claims are selling for more than 70 cents, as investors grow optimistic that FTX’s new leadership will recover a sizable portion of the roughly $8 billion that the founder, Sam Bankman-Fried, was convicted of stealing from customers.
“The market is insane,” said Mr. Braziel, a partner at the investment firm 117 Partners. “It’s so hot.”
Disclaimer: The content of this article is for informational purposes only and does not constitute financial advice. Please consult with a professional before making any investment decisions.
Investors are seizing an opportunity in the aftermath of FTX’s bankruptcy filing. FTX, a prominent cryptocurrency exchange, faced financial difficulties and filed for bankruptcy last year. Now, investors are spending significant amounts of money on FTX bankruptcy claims, hoping to profit from the recovery efforts led by the firm’s new leaders.
One investor, Thomas Braziel, specializes in collapsed businesses and has been brokering transactions related to FTX’s downfall. He connected one of his clients with a large financial firm that had lost nearly $100 million due to FTX’s collapse. In December, the financial firm sold its claim in the FTX bankruptcy for 6 cents on the dollar, choosing to collect immediate cash rather than waiting for FTX to repay its creditors over an extended period.
The market for FTX claims has since exploded, with Braziel recently facilitating the sale of a $19 million FTX claim for 68 cents on the dollar. This transaction resulted in a commission of nearly $100,000 for him. Some claims are even selling for more than 70 cents, as investors become increasingly optimistic about the potential recovery of a significant portion of the approximately $8 billion that FTX founder Sam Bankman-Fried was convicted of misappropriating from customers.
The frenzy surrounding FTX bankruptcy claims has been described as “insane” by Braziel. Investors are eager to capitalize on the situation, betting on the competence of FTX’s new leadership and their ability to recover substantial funds. The market’s enthusiasm reflects the belief that FTX’s bankruptcy may not spell doom for investors after all.
It is important to note that investing in bankruptcy claims carries risks and uncertainties. The outcome of FTX’s recovery efforts is uncertain, and there is no guarantee that investors will recoup their investments. As with any investment, individuals should conduct thorough research and seek professional advice before making any financial decisions.
