Crypto’s carcass will attract hedge fund vultures

FIRST Silvergate Capital, 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 US$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 (the acronym is short for “hold on for dear life”). 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 per cent discount. Crypto lender Genesis’s claims have been reportedly sold at 65 per cent to 75 per cent discounts; buyers include Jefferies.