{"id":1688,"date":"2023-03-10T15:14:11","date_gmt":"2023-03-10T15:14:11","guid":{"rendered":"https:\/\/solanacrypto.news\/2023\/03\/10\/cryptos-carcass-will-attract-hedge-fund-vultures\/"},"modified":"2023-03-10T15:14:11","modified_gmt":"2023-03-10T15:14:11","slug":"cryptos-carcass-will-attract-hedge-fund-vultures","status":"publish","type":"post","link":"https:\/\/solanacrypto.news\/2023\/03\/10\/cryptos-carcass-will-attract-hedge-fund-vultures\/","title":{"rendered":"Crypto\u2019s Carcass Will Attract Hedge Fund Vultures"},"content":{"rendered":"<div>\n<div class=\"wpds-c-grBDNq hide-for-print mb-sm undefined\">\n<div class=\"PJLV PJLV-iAjpuP-css flex items-center\" config=\"[object Object]\" data-qa=\"article-actions\">\n<div class=\"wpds-c-fLphcs\">\n<div class=\"wpds-c-jmLDag wpds-c-jmLDag-bywHgD-variant-primary wpds-c-jmLDag-biynoz-density-compact wpds-c-jmLDag-hZSyid-isOutline-true wpds-c-jmLDag-ejCoEP-icon-left wpds-c-jmLDag-futxca-cv wpds-c-jmLDag-iknmtxO-css\"><button aria-label=\"Comment\" class=\"PJLV PJLV-iPnDcc-css\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewbox=\"0 0 16 16\" fill=\"currentColor\" aria-hidden=\"true\" focusable=\"false\" role=\"img\" class=\"wpds-c-kKAfCG wpds-c-efqEZa focus-highlight flex items-center justify-center brad-lg pointer transition-400 ease-in-out transition-colors\" aria-label=\"Comment on this story\"><title>Comment on this story<\/title><path d=\"M14 14V2H2v9.47h8.18L12.43 13ZM3 10.52V3h10v9.23l-2.5-1.66Z\"\/><\/svg><\/button><\/p>\n<p>Comment<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"teaser-content grid-center\">\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">First Silvergate Capital Corp., now an old-fashioned\u00a0run on venture capital bank SVB Financial Group. These are hard times for the tech faithful, especially in crypto, where market jitters have sent Bitcoin back below $20,000. In a sector where the only thing booming is corporate failures, it pays to be an undertaker or autopsist\u00a0rather than a true believer.<\/p>\n<\/div>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">Hedge-fund investors and lawyers making thousands of dollars per hour are\u00a0sifting through the wreckage left behind by HODLers. When FTX collapsed, funds such as Baupost Group and Oaktree Capital Management   hunted out claims held by customers with\u00a0assets\u00a0stuck on the exchange. One such client,\u00a0Galois Capital, sold its FTX claims at an 84% discount.\u00a0Crypto lender Genesis\u2019s claims have been reportedly sold at 65% to 75% discounts; buyers include Jefferies LLC.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">Expect more to come after Bitcoin\u2019s latest drop,\u00a0down more than 20% from its February peak reached when traders were piling\u00a0in despite a regulatory crackdown, a string of bankruptcies and the impact of rising interest rates. As investors look for a safe haven from recession fears, it remains clear that crypto isn\u2019t one; it\u2019s\u00a0down 75% from its 2021 high.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">\u201cThere\u2019s value in the carcass,\u201d says Thomas Braziel, founder of 507 Capital, an investment firm named after a section of the U.S. bankruptcy code.   He cut his teeth making double-digit returns\u00a0on Bitcoin\u2019s first big exchange bust, Mt. Gox \u2013 a story covered\u00a0on\u00a0the   Bloomberg Crypto podcast\u00a0\u2013 buying his first claim at a 62% discount. Today, he has a lot more choice, with\u00a0FTX, Voyager Digital Ltd., Celsius Network LLC and Three Arrows Capital\u2019s bankruptcies all working their way through the courts. One still needs at least a little bit of faith to wade into the $20 billion crypto-claims market\u00a0(excluding discounts and double-counting), but it remains the preserve of MBA types and number-crunchers, not cypher-punks.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">The job of Braziel and his peers sounds simple: They bid\u00a0to acquire bankruptcy\u00a0claims from holders at a steep discount to reflect the time, effort and expectation in\u00a0getting any money back\u00a0(Jefferies has reportedly estimated a recovery rate of 10% to 35% at FTX after fees). Sellers get the immediacy of cash; buyers get any upside from their doggedness in following the process to the end. Braziel refutes the imagery of the predatory or ambulance-chasing\u00a0vulture \u2014 he says he encourages claims-holders not to sell unless they have to.\u00a0The idea is that today\u2019s burning dumpster is tomorrow\u2019s hotel, just as 2008\u2019s Washington Mutual Inc failure became\u00a0$3 billion mortgage lender Mr Cooper Group Inc.\u00a0<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">The reality is somewhat riskier \u2014\u00a0as Braziel puts it, it\u2019s like taking an 11-foot pole to an investment that nobody would touch with a 10-foot one. Maybe someone could look at Silvergate and see a\u00a0WaMu in there. And maybe even FTX has some assets of value under the hood, like its stake in Robinhood Markets Inc. But crypto\u2019s bubble produced shenanigans beyond the ken of even\u00a0those who worked on Enron Inc.\u2019s demise. FTX\u2019s assets included its own made-up token, FTT, and other highly volatile ones like Solana and Serum. Working out the upside for penny stocks held by an exchange that used emojis in accounting is no mean feat. Even the outlook for Bitcoin is hard to gauge when low-risk Treasury bills\u00a0today yield about 5%.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">Bridging the gaps between buyers and sellers might also get harder as a result of the current\u00a0market jitters around Silicon Valley Bank, which has plunged following a surprise announcement Wednesday that it was issuing $2.25 billion of shares to bolster its capital after significant losses on its investment portfolio, and has put itself up for sale after the capital increase failed according to CNBC.\u00a0That\u2019s likely to\u00a0increase risk aversion even in areas unrelated to the lender\u2019s own woes.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">Regulatory crackdowns are also something to keep in mind, considering\u00a0Voyager\u2019s sale to Binance, an exchange under very high scrutiny.\u00a0And there\u2019s also the risk that more voices are competing for the claims in creditors\u2019 back pocket \u2014\u00a0sometimes with unrealistic promises. The sight of 3AC\u2019s founders jumping on the claims bandwagon with a new exchange targeting crypto creditors desperate to get back into trading is dispiriting but not surprising. Even a 12-foot pole looks too short for that one.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">Crypto\u2019s\u00a0rising body count and interest from bankruptcy specialists suggests we are still in the grip of a credit bubble being unwound, and not a bold new dawn of animal spirits. That\u2019s probably just as well, given where last round of euphoria led. With central bankers openly wondering whether\u00a0crypto has any value at all, this market really is one for the brave.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">More From Bloomberg Opinion:<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">\u2022 The Menace of  Central Banks\u2019 Crypto Dreams: Marcus Ashworth<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">\u2022 Crash Course:  Cryptocurrencies Vs. Reality: Timothy L. O\u2019Brien<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">\u2022 Matt Levine\u2019s Money Stuff:  The SEC Comes for Crypto Custody<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">Lionel Laurent is a Bloomberg Opinion columnist covering digital currencies, the European Union and France. Previously, he was a reporter for Reuters and Forbes.<\/p>\n<\/div>\n<div class=\"article-body\" data-qa=\"article-body\">\n<p data-testid=\"drop-cap-letter\" data-el=\"text\" class=\"wpds-c-cYdRxM wpds-c-cYdRxM-iPJLV-css overrideStyles font-copy\" dir=\"null\">More stories like this are available on <a target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/opinion\" rel=\"noopener\">bloomberg.com\/opinion<\/a><\/p>\n<\/div>\n<section class=\"dn-ns hide-for-print\" data-testid=\"mostRead\" subscriptions-section=\"content\"\/><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Comment on this story Comment First Silvergate Capital Corp., now an old-fashioned\u00a0run on venture capital bank SVB Financial Group. These are hard times for the tech faithful, especially in crypto, where market jitters have sent Bitcoin back below $20,000. In a sector where the only thing booming is corporate failures, it pays to be an [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1689,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1688","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/posts\/1688","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/comments?post=1688"}],"version-history":[{"count":0,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/posts\/1688\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/media\/1689"}],"wp:attachment":[{"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/media?parent=1688"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/categories?post=1688"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/solanacrypto.news\/wp-json\/wp\/v2\/tags?post=1688"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}