OpenAI rival Anthropic's growing value is sparking hope for some FTX creditors that they will be made whole.
The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. All right, open A I rival. Anthropic growing value is sparking hope for some FTX creditors that they will be made whole. Joining us now to discuss is 1 17 partner, Ceo and founder Thomas Brazile. Welcome to the show, Thomas. Hey, thanks for having me. Thanks for being here. Now. What a turn of events. Let's just lay down a little bit of a foundation here. So days ago, uh Anthropic A I raised $1.25 billion from Amazon. They're in talks to raise at least 2 billion more in new funding. The value of the company is skyrocketing amongst these investments. And here we have FTX and Alameda Research who according to the financial Times made a $500 million investment in the company in November of last year. Could this make FTX creditors whole? Yeah. Uh Thanks for having me on. Let's see. Uh You know, you're not, we're not liquid. Uh the estate is not liquid and you know what someone raises at versus what the entire company is sold at are two different numbers and secondaries generally trade at discounts to what either primaries or fundraising rounds will, will trade. But it's a fantastic, fantastic turn of events for FDX creditors but nothing but good news out of John Ray and the FDX estate. I mean, not that they did any of this. Um, this was basically some of the venture investments that they made. Hopefully there's a few more nuggets in there. It's very similar to some of the dot com bankruptcies where you had very high repays in some of the um, bankruptcies where they had big venture books like Tom Disco, anybody that's an old, old guard distress, uh investment person. They would probably remember these, some of these bankruptcies a and, and so in this situation, uh kind of walk through a little bit. Uh What rights do FTX holders have? I, you know, you talked about, uh the price on the secondary market. I can it go on the secondary market just yet according to the way the investment was made. I don't know, there's a lot of disclosure. I'm not sure why there wouldn't if there are transferability right issues. Um Generally you can do what are called four contracts. So there are ways to get around transferability issues. Um I'm sure that anthropic or any um, successful startup would love to get uh an FDX, uh an FTX or three arow out of their cap table. So I'm sure they'd be chomping at the bit and would help with any transferability issues that might exist in these preexisting documents. Why would they, I mean, in many ways, it's, it's kind of awesome if you take in money and then you don't have to deal with the investors breathing down your neck the entire time. Yeah, that's true. I, I think that, uh you know, if Amazon or Google are taking out a big chunk, why not just buy off as well at the same time, uh double down by taking off the stake. But I, I hear what you're saying and that is a strategy. I've even heard some venture backed FDX companies. Uh echoing that idea even saying that they were gonna quote unquote, wash out the estate. And I said, OK, well, good luck with that. Uh But it is a strategy. Um Yeah, most recently we've heard that there's a dispute over two luxury jets that were apparently owned by Sam Bank. The estate is trying to get those back, I guess at a more broader level. Are you surprised at how much money, how many funds the estate has been able to claw back? Um, in the last little while. Uh, you know, I think, uh you know, you always see the low hanging fruit is what sells fast. So people see numbers like I can't remember is it, it's not called, I think it's called Mai on Labs. But some of those early adversary proceedings which in, in bankruptcy court, uh lawsuits are brought adversary proceedings. So these fraudulent transfer conveyance cases, they settled for basically what they invested. And people were like, oh, there you go. Like just take that across the whole portfolio and there you go. It's like no, the reason they settled early is because they were at close as to what the company invested. So if you get 100% repay, it's hard to uh to ask for more. Um what's interesting, it would be interesting to watch John Ray and team kind of toggle between if the statement is a huge bust asking for their money back and if it's um a big winner, you know, saying, hey, this is great. Let's uh keep this equity, let's sell this equity. Let's, you know, we're let's participate. Well, can't really make a further investment in an IP O or later round, but it is interesting to see. And no, I mean, I would say I'm surprised uh but it is great to see for the kids at home who want to get into uh distressed debt at this moment because obviously we're seeing a lot of uh a lot of collapses uh all around the crypto industry as volumes fall and, and, and just, there's the lack of lack of investment overall and a lot of companies going belly up and assets flying all over the place. How can, how can, how can somebody uh with modest, you know, piggy bank savings play? Uh basically go in and be a vulture. Mm. Uh thank you for that compliment. Uh No, I think that. No, I listen, I did it in real estate years ago. I loved it. It was the best thing I bought an $8000. No, it's not an offense. You're talking to somebody who lives in an $8000 apartment, uh, that I bought in the nineties. So. Yes. Well, no, no, no, I, I'm, I'm honestly, I'm joking with you. Uh I would say what's nice about the stress investors is they're the opportunities to capital, they'll show up but no one else will. So in a weird way, it kind of takes weak hands and puts it into strong hands. And so it, it, in my mind puts a, a decent floor in the crypto markets in general, but to answer your original question. So I think there's a, there's a place for them in the ecosystem of investing. Um But just in terms of uh home gamers or more retail focused or retail clients, it is quite hard. I mean, there are things like X claim which is a prominent, like a marketplace for large and small claims, but I think for their, where they really add values probably on smaller claims like surfacing value and allowing other people to, I think you still have to be accredited. I could be wrong. I'm not sure. And then you also have uh if I don't mention them, they'll, they'll hate me, um, claims slash market or claims, uh, hyphen market. Um, both are good firms that wrong with these guys. Um, these are marketplaces. I don't know. I mean, maybe there's a way, um, to, to, to play the distress. Um, I'm sure there are some small, smaller cap companies that have some exposure in general and their, maybe their stocks are down way because of it, uh, way down because of the FDX or three arrows exposure. And, uh, you know, for the enterprising investor, that's probably a great place to start as well. Um Yeah, but it's quite hard. I mean, you kind of need to know what you're doing. Yeah. Well, it was reported recently that the expected pay to FTS creditors has more than tripled this year. Of course, setting the claims market into a little bit of a frenzy, maybe just do a little comparison for us when we look at uh other distressed crypto firms, like let's say Voyager Genesis, where does FTX fall? So I see, I gave this as a quote myself, which is kind of bizarre. But I, I said, uh I said that it's the hottest ticket in town in distress market and it's true. I mean, there's no reason to beat around the bush like every distressed firm. Uh, and their brother wants to be involved in FDX versus the other dockets. It's a bit of a shame for other creditors. Um, that doesn't mean there isn't an active active market in Genesis block five °C, um, Voyager and even three arrows. But some of those dockets are smaller. It's a more concentrated customer base. Um, that, you know, I guess I'm sort of speaking to three arrows and then, uh, and then, yeah, I mean, some are extremely retail focused. So, like Celsius and Voyager, the problem is like the claims are very small and so it makes it hard for institutional firms to really get smart on the docket. That doesn't mean they aren't. And so if you look at the docket, you'll see some transfers. So Vo Voyager is kind of over Celsius is trading pretty actively now because the plans in and uh FDX is, you know, so the prices have gone from, you know, at the end of last year, the top bid was probably low teens to now the top bids are in the forties. Uh So that's, you know, almost a four X move. Um And so yeah, so it's, it's, it's extremely active. All right. And Thomas, just before we go, the last time we spoke to you, you started setting up a new entity to expand beyond bankruptcy claims into brokerage and advisory work. Uh What's the progress on that? Any updates? It's going well, I mean, it's really an outgrowth of what we're already doing. I mean, we're already in the claim space and what we realize is, you know, people call us with, you know, capital, they need you know, they have capital market issues, you know, they have capital needs, they have, you know, more than they have working capital, you know, fund means as opposed to just, I have a bankruptcy claim. So a lot of the, you know, call it startups the FT X impaired, um, or even celsi impaired. And so we try to, you know, sort of morph the firm a little bit to be like, ok, well, we can do just more, we'll do more than claims and we can help you figure out the way forward um for, you know, your budget or, you know, whatever you um sort of trying to accomplish. So it's more of a capital solutions business. Now, um We're trying to focus on the crypto space and it's, it's, it's green field because, you know, crypto five years ago for large digital firms was totally untouchable and now it's, you know, now there's, there's a lot of activity. So, all right, Thomas, thanks for joining the show this morning and unpacking what's going on with the FTX bankruptcy. Always a pleasure having you here. This thanks guys. Happy Friday. Happy Friday. All right. That was 1 17 partner, Ceo and founder Thomas Brazil.