After the crypto market’s ‘Lehman moment’, the FTX crash, everyone is trying to figure out what happened. Also, investors are wondering what will happen next. Thomas Lauria, a lawyer nicknamed ‘Buldog’, who predicted a crypto ‘liquidation boom’ long before FTX, of which Sam Bankman-Fried was CEO, filed for bankruptcy, explains what’s next.
Does FTX have a rebuild facility?
As interest rates and inflation rise, Thomas Lauria predicts a ‘mind-blowing’ wave of bankruptcies on the horizon. He also notes that it will hit crypto investors especially hard. As you follow on Kriptokoin.com, Sam Bankman-Fried’s crypto empire collapsed with FTX. Long before this crash, in July, Lauria had bad news for investors: Wait for it to disappear!
FTX filed for bankruptcy under Chapter 11 last Friday. This often indicates that a firm hopes to force lenders to make a cut on their loans to help the company bounce back stronger. FTX’s new CEO, John J. Ray III, says it plans to “maximize returns for stakeholders.” But Lauria notes that the ability of crypto companies to reorganize will depend on whether they hold any real assets. Also, “Most of them don’t,” he says.
“Crypto is like the tulip bulb frenzy in the Netherlands”
We’ve seen several bankruptcies in the crypto market crashes in 2022. There’s also talk of tech startups struggling to raise new money. Do you expect to see a wave of tech and crypto restructuring? And are there any special considerations, reasons for discarding the playbook? Thomas Lauria answers this question as follows:
I think technology and crypto are very different. From my point of view, crypto is always a bit like the tulip bulb frenzy in the Netherlands. At the end of the day, I don’t think there is a real presence there. It’s very difficult to reorganize when you don’t have a real presence.
“Probably more of a purge explosion”
According to Lauria, restructuring is built on the ability to continue to bring in new capital. So when that stops, he says, there’s not much left to reorganize. So he’s not sure what’s going on in the cryptocurrency market right now is really going to be an explosion of restructuring. Thomas Lauria continues his explanations as follows:
However, it’s really probably going to be more of a purge explosion. Technology is different. Tech companies have real assets. I believe there will be restructurings in this area. And in fact, we’ve seen a number of technological restructurings just as successfully as last year. I think this will continue.
27141
