Crypto’s Lehman moment: Investors buy $250M of FTX claims — Report
The bankruptcy claims market has been growing bullish on the debts of the collapsed cryptocurrency exchange FTX as major credit investors have been rushing to buy FTX debts.
Investors like Silver Point Capital, Diameter Capital Partners and Attestor Capital have purchased more than $250 million worth of FTX debts so far in 2023, Bloomberg reported on Sept. 21, citing an in-house analysis of public court filings.
The FTX debt has also attracted investors like Hudson Bay Capital Management, which reportedly bought a $23 million FTX claim and subsequently sold about 50% of it to Diameter.
In line with growing demand, the price of some FTX claims has been soaring this year. Some low-ranking FTX claims have jumped 191%, surging from $0.12 in early 2023 to about $0.35 recorded in recent weeks, the report said, citing data from the crypto debt broker Claims Market.
The historical indicative prices of “bid” and “ask” for larger FTX claims have also risen this year, according to the Claims Market’s charts.
The debt investors have been piling up FTX claims, betting that the firm’s bankruptcy process would unlock additional value by the time it’s resolved. One potential trade-off is that major bankruptcies can take years to unwind, and it can be hard to know what a collapsed company would be worth, especially in crypto.
According to some bankruptcy claim investors, the total value of all traded FTX claims might be much higher than the $250 million of deals in public court records.
Related: Stanford to return millions in crypto donations from FTX
Bankruptcy claims investor Thomas Braziel reportedly said that buyers and sellers sometimes wait months to file the paperwork for a debt trade. He claimed to be aware of individual FTX
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