In an unprecedented turn of events, renowned credit investors such as Silver Point Capital, Diameter Capital Partners, and Attestor Capital have acquired over $250 million of debt from the collapsed crypto platform FTX. This voracious appetite for FTX debt did not stop there, as Hudson Bay Capital Management acquired a $23 million FTX claim, and then sold about half to Diameter.
Source: Bloomberg
Rising Prices of FTX Debts
The growing interest from investors has triggered a significant rise in FTX debt prices throughout 2023, with some indicators and debt markets showing price increases of nearly 200% over the year.
The aggressive purchase of debts reflects a collective sentiment among investors that FTX’s ongoing bankruptcy proceedings could result in significant value for creditors. However, this is a long-term game. The complexity of major bankruptcies, especially in the crypto field, can span for years, making it difficult to determine the final value of a failing company.
People made fortunes from Lehman and Madoff – I think these people see FTX as a Lehman or Madoff. The individuals buying these securities, I consider them to be among the smartest in the crisis field.
Thomas Braziel
Nevertheless, some analysts speculate that the total value of repurchased FTX debts could surpass the publicly recorded $250 million figure. According to renowned bankruptcy investor Thomas Braziel, there have been or are currently ongoing individual transactions of over $100 million.
