Distressed Debt Investors Snatch Up FTX’s Bankrupt Claims
Distressed debt investors are seizing the opportunity to acquire bankrupt crypto exchange FTX’s claims, with investment firms like Silver Point Capital, Diameter Capital Partners, Attestor Capital, and Hudson Bay Capital Management reportedly purchasing $250 million worth of FTX debts since the beginning of 2023. This unregulated market allows investors to buy debt contracts for a fraction of their original value.
An investor in bankruptcy claims, Thomas Braziel, compares the FTX situation to the Bernie Madoff investment scandal, stating that those buying into these dockets are some of the smartest people in distress. Recently, FTX debts have been quoted at $0.35 on the dollar, a significant increase from $0.12 at the start of the year. Investors often acquire rights to accounts containing assets trapped on the crypto exchange.
Notable Purchases by Investment Firms
Hudson Bay Capital Management bought a $23 million claim from a fortune cookie distributor and later sold half of it to Diameter Capital Partners. Contrarian Capital Management acquired an account with owed crypto assets and cash amounting to $430,000. Attestor Capital purchased a $17 million claim from Miami-Dade County related to FTX’s naming rights for the city’s NBA arena.
Hot Take: Distressed Debt Investors See Opportunity in FTX’s Bankruptcy
Distressed debt investors are taking advantage of FTX’s bankruptcy by purchasing its claims at a fraction of their original value. With notable investment firms buying up millions of dollars worth of debts, this unregulated market provides opportunities for savvy investors to profit from distressed situations. The surge in FTX debt prices indicates growing confidence in the potential recovery of assets stuck on the exchange. As more investors enter this market, it will be interesting to see how FTX’s bankruptcy proceedings unfold and whether these claims will yield substantial returns.
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