Crypto’s Carcass Will Attract Hedge Fund Vultures
The only winners in this environment are bankruptcy lawyers and distressed-debt investors.
The Silvergate Bank headquarters in La Jolla, California, US.
Photographer: Ariana Drehsler/BloombergFirst Silvergate Capital Corp., now an old-fashioned run 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 rather than a true believer.
Hedge-fund investors and lawyers making thousands of dollars per hour are sifting 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 assets stuck on the exchange. One such client, Galois Capital, sold its FTX claims at an 84% discount. Crypto lender Genesis’s claims have been reportedly sold at 65% to 75% discounts; buyers include Jefferies LLC.