This Investor in Distressed Assets Sits on an 18x Gain from Mt. Gox Claims he Bought in 2017

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Fredrik Vold

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June 26, 2023 06:53 EDT

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An investor in distressed assets has seen an 18x gain on claims he bought from creditors after the collapse of the infamous crypto exchange Mt. Gox, and he is now looking for more deals.

Thomas Braziel, an investor who has made a living out of buying up bankruptcy claims and other distressed assets, in 2017 decided to buy up claims from the now-defunct Japanese crypto exchange Mt. Gox, a recent Bloomberg article has revealed.

According to the article, Braziel never had much of an interest in Bitcoin (BTC), saying he just thought it would be “cool to buy a Japanese cryptocurrency bankruptcy claim.”

Braziel’s firm, 507 Capital – which is named after a section in the US bankruptcy code – bought claims worth nearly 4,000 BTC, using USD 1m that was raised from a family office.  

About 850,000 BTC disappeared during the Mt. Gox collapse in 2014, with creditors as of 2022 still waiting to get their money back. Braziel said in the article that he expects disbursement to begin in “early 2023.”

However, the long wait has not deterred Braziel, who is now on the look for new deals after the latest market downturn once again has caused bankruptcies among crypto firms.

Among the troubled companies now in bankruptcy proceedings in courts in the US are the crypto lenders Celsius (CEL) and Voyager Digital. According to Braziel, his firm has not made any new deals related to these cases yet. However, he admitted that “it’s exciting to see stuff […] but at the same time you feel bad [for investors].” 

An interesting point in these legal proceedings is that there is little precedence for courts to judge on matters related to crypto. For instance, the question of whether creditors should be repaid in cash or crypto remains open.

“Nothing in the bankruptcy code talks about crypto assets. […] So the parties and bankruptcy courts will likely be analogizing various novel crypto issues to existing legal principles,” Elie Worenklein, a restructuring lawyer at Debevoise & Plimpton, was cited as saying.