Distressed Investors Looks For FTX’s Stranded Customer Funds

Apollo Global Management, Attestor, and distressed Investors are looking to buy claims from clients of the bankrupt crypto exchange FTX who would otherwise have to wait years for compensation from bankruptcy courts.

While many people will have waited for a positive outcome of a potentially years-long bankruptcy procedure, others are turning to distressed debt brokers and purchasers for rapid deals. The act of collecting arrives rather soon, and this might cause a massive loss on their positions by selling for just cents on the dollar to buyers who have a sense of patience trying to recover more from the bankruptcy process.

507 Capital, a niche investment business, had already purchased many claims from hedge funds that seek to exit from FTX, Apollo Global Management and Attestor are among the better-known investors to have held conversations on buying claims.

Thomas Braziel, the founder of 507 Capital founder indicated that fund managers mostly want an exit to move on and not have to deal with the court process. Additionally, some FTX customers wanted to close a sale of their claims by year-end so they could write down the losses against taxes, Braziel said.

Previously, Braziel had paid 5 to 6 cents on the dollar for FTX claims with a nominal value of $2 million, $3 million and $8 million. Besides, he was once in talks with a Singapore-based fund manager for a claim of about $100 million and a German fund that has $23 million stuck with FTX. Added to this is the fact that funds usually negotiate with buyers asking for up to 10 cents on the dollar with their sale.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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