Bankruptcy Claims Traders Offer Crypto Holders An Exit

We wrote last month about the crypto market, two high-profile bankruptcies, and the shockwave it could create for crypto investors who are now barred from selling or accessing their accounts on these brokerages. Why can’t they access their accounts? The account holders are now the equivalent of creditors in a bankruptcy filing by two major brokerages, Celsius and Voyager. They will have to wait for these bankruptcy filings to be processed before they are able to access their funds. At that point, they may not be able to recover a fraction of what they had invested on the platform.

Never fear, however, bankruptcy claims traders are here to save the day. They’ll purchase the rights to your coins at a 75% discount so that you can liquidate your interest in the platform and at least recover some of the money you invested. The option may be attractive to some investors who don’t know when they’ll get their money back, how much money they’ll get back, or if they’ll get any money back.

What are bankruptcy claims traders? 

Angels or vultures, depending on who you ask. Bankruptcy claims traders offer creditors whose assets are tied up in a bankruptcy filing the ability to opt-out and recover some cash quickly as opposed to rolling the dice and waiting for the filing to proceed.

Typically, it’s credit card companies, stores, and other businesses that have a vested interest in removing themselves from a commercial bankruptcy to get their money quickly. It is quite rare that you have customers of an online platform becoming the equivalent of creditors and being approached by bankruptcy claims traders. Some companies have already sold their claims to third parties.

While bankruptcy claims trading is an important part of the economy, small-time investors who use their disposable income to make crypto investments don’t have any reason to know that they exist.

Is it a good deal? 

It might be, but that all depends on how the bankruptcy plays out. The creditor is essentially purchasing the certainty that they will receive some compensation for their assets but the amount they will receive is directly tied to the risk the investor is taking when purchasing the assets. In this case, no one quite knows what will happen so the risk for the investors is high and hence, compensation for the assets is low. Plus, since the bottom has fallen out of a number of these coins already, the current value of their assets is already low. For those who are used to buying coins at one price and selling them for another higher price, this is a worst-case scenario. On the other hand, if they don’t sell low now, they may never recover anything.

Talk to a Jacksonville Bankruptcy Attorney Today

 If you are facing financial struggles due to market factors beyond your control, you may be able to discharge your debts in bankruptcy. Call a Jacksonville bankruptcy lawyer at the Law Offices of Carol Galloway today to schedule a free consultation and learn more about how we can help.

Source:

bloomberg.com/news/articles/2022-08-09/wall-street-pros-offer-crypto-holders-a-backdoor-bankruptcy-exit