London-based boutique distressed asset trading firm Attestor Ltd. experienced a significant bonanza as the value of crypto assets purchased from Sam Bankman-Fried’s FTX crypto exchange soared.
According to a Bloomberg report, Attestor’s trade became the talk of distressed investing circles as profits multiplied at an astonishing rate – 50%, 100%, and even close to 200%.
Multi-Million-Dollar Gain From FTX Bankruptcy Threatened
As the value of crypto assets rose sharply, Attestor and other market participants reportedly seized the opportunity to purchase distressed assets at “rock-bottom prices” from Bankman-Fried’s clients seeking to recover their losses.
The bankruptcy proceedings of FTX, Bankman-Fried’s cryptocurrency exchange, are projected to deliver investors the full amount of their frozen funds, estimated at 100% of the initial investment.
However, Attestor’s hold on its share of the windfall has become uncertain. The seller of one of the largest FTX accounts purchased by Attestor, an allegedly “obscure” Panamanian company called Lemma Technologies, controlled by a South Korean trader, has opted to keep the claim to itself, at least for now.
Attestor’s legal team argues in a New York court that this situation demonstrates “seller’s remorse.” The price agreed upon with Lemma in June 2023 was $58 million, but the claim’s current value is expected to reach $165 million.
Lemma, the Panamanian firm, has yet to publicly explain its position or respond to Attestor’s lawsuit in New York. Attestor’s attorneys assert that Lemma will only honor the trade confirmations if compelled to do so by the force of law.
Adding to the intrigue is that Lemma’s main investor, Junho Bang, is facing legal charges in a separate case in Seoul, South Korea.
Embezzlement Charges
Attestor agreed with Lemma in June to purchase a bundle of FTX claims, believed to be among the largest. With this year’s cryptocurrency recovery and successful asset recovery efforts, these claims are now set to pay out in full.
The attestor is reportedly eager to close the deal and is willing to “complete the transactions immediately.” However, Lemma’s Junho Bang appears to be in no hurry to do so, possibly due to his involvement in the separate crypto-lender Haru Invest case, according to Bloomberg.
Bang stands accused of “embezzling” digital assets from the lender and is currently facing charges by South Korean authorities. Although the Haru Invest case and the Attestor’s lawsuit over FTX claims are distinct, Bang is central to both matters.
During the cryptocurrency boom, Haru Invest allegedly offered “high returns,” but it eventually froze customer redemptions, citing issues with its service provider, B&S Holdings, which allegedly provided false information. B&S described itself as a quantitative trading company for crypto assets, including FTX’s FTT token.
As the legal proceedings continue, the resolution of these cases will shape the outcomes for the involved parties and shed light on the future dynamics of distressed investing in the crypto space.
Featured image from Shutterstock, chart from TradingView.com