FTX bankruptcy filing brings huge profits to hedge fund Diameter
PANews reported on July 23 that according to Bloomberg, after the chaotic collapse of the crypto exchage FTX, a huge bet and unexpected events in the bankruptcy process brought huge profits to the hedge fund Diameter Capital Partners. The company initially bet that the value of the exchange's assets would exceed 20 cents, and the value of these assets has soared to more than 100 cents. Diameter's managing partners Scott Goodwin and Jonathan Lewinsohn wrote in a letter to investors this month that in the second quarter, the transaction was the largest contributor to the earnings of Diameter's two key funds and is still a major holding of the company.
“SBF still caused holders to lose all of the appreciation in cryptocurrency, which had risen in value by approximately 230% as of the end of the quarter,” the partners wrote in the letter. “So, he went to jail and Diameter did well. A win-win situation if we ever saw one, this is it.” The firm now has more than $400 million in exposure, according to the letter and a person familiar with the matter.
Diameter expected customer claims to be denominated in dollars, with amounts determined by the price of the underlying cryptocurrency on the day the company filed for bankruptcy. But it didn’t anticipate that assets the hedge fund had deemed worthless, including artificial intelligence startup Anthropic, would be converted into dollars at high prices as the case progressed. Diameter kept buying even as the value of claims rose.
