Digital Assets: Rich Pickings For Distressed Asset Investor Who Picked Up Mt. Gox Claims In 2017
Thomas Braziel stands to make 1700% on the Mt. Gox deal.
The collapse of crypto exchange Mt. Gox in 2017 spelt opportunity for Thomas Braziel, a distressed asset investor and son of two insolvency lawyers. He raised $1 million from a family office and scooped up about 4,000 bitcoins worth of claims from customers of the exchange, which lost 850,000 bitcoins in a hack that forced it into bankruptcy in 2014. (Bloomberg)
After arduous resolution and recovery procedures, Mt. Gox is nearing payouts to its creditors, and Braziel is likely to reap a rich, 1700% return on his patience and courage on the bitcoin investment he made in 2017.
Braziel, the founder of 507 Capital, which is named after a section of the US bankruptcy code, is not sitting on his laurels, however.
That’s because similar opportunities may again be available in the crypto assets market after the meltdown in prices since November 2021. Industry players such as Terra, Three Arrows Capital, Voyager Digital and Celsius Network have imploded, leaving investors high and dry, nursing losses in the billions of dollars.
Many of these investors were sucked into plowing money into seductively high-yielding schemes such as Celsius’s high-yield Earn account. They now rank as unsecured creditors in a bankruptcy asset restructuring, and face a big question mark on the recoverability and amount that can be recouped on their investment.
Distressed investors such as Braziel, and investment firm Argo Partners are sniffing around for deals such as from Mt. Gox, but have held off from actually striking one so far.
Last month, it was reported that Ripple Labs, the blockchain payments company that created the XRP cryptocurrency, was interested in purchasing assets of Celsius. Its lawyers applied for, and were granted, permission to join the insolvency proceedings even though the company is not among key creditors of Celsius.
On problem is that courts need to judge on crypto bankruptcies with little historical precedent.
Even the bankruptcy code has nothing to say about crypto assets.
Related Story: Ripple Labs Eyeing Pieces Of Celsius In Bankruptcy Wreckage
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