Distressed bond investors are reportedly gobbling up hundreds of millions of dollars worth of debt from bankrupt cryptocurrency exchange FTX.
According to new bloomberg reportan analysis of records shows that investment firms including Silver Point Capital, Diameter Capital Partners, Attestor Capital and Hudson Bay Capital Management have acquired $250 million worth of FTX since early 2023. It shows that you bought a bond.
According to Bloomberg, investors operate in an unregulated bankruptcy debt market where they can buy debt contracts for a fraction of the amount owed.
Thomas Brazile, a bankruptcy debt investor, told Bloomberg that the FTX situation is similar to the Bernie Madoff investment scandal.
As Brazil stated to Bloomberg,
“People have made careers out of Lehman and Madoff. I think people look at FTX like Lehman and Madoff. The people who are buying these papers are the smartest of the suffering.” I think they are very good people.”
According to the report, FTX debt has been at $0.35 to the dollar in the past few weeks, up from $0.12 to the dollar at the beginning of the year. According to Bloomberg, investors often buy rights to accounts with assets held on crypto exchanges.
Notable corporate purchases include Hudson Bay Capital Management’s purchase of $23 million in debt from a fortune cookie seller, which it quickly sold half to Diameter Capital Partners; These include Contrarian Capital Management, which acquired accounts that owed crypto assets including Bitcoin (BTC) in January. ) and Ethereum (ETH) and $430,000 worth of cash.
In a separate purchase, Attestor Capital bought a claim from Miami-Dade County related to naming rights that FTX once owned to the city’s NBA arena for $17 million, according to the report.
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