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 still have the possibility to configure?
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. Koindeks.com As you follow, Sam Bankman-Fried’s crypto empire collapsed with FTX. Long before this collapse, Lauria had bad news for investors in July: 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 cut back on its loans to ensure the firm returns in stronger form. 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 organize again will depend on whether they have any real assets. “Most of them don’t,” he also says.
“Crypto is like the tulip bulb frenzy in the Netherlands”
We’ve seen several bankruptcies in the crypto market crashes in 2022. Also, there are tech startups trying to raise new money. Do you expect to see a wave of tech and crypto restructuring? And is there a random custom thread, 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 a hassle to organize again when you don’t have a real presence.
“Probably more of a purge explosion”
For Lauria, again, 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. Therefore, he is not sure that what is happening in the cryptocurrency market right now will indeed be an explosion of restructuring. Thomas Lauria continues his explanations as follows:
However, there will indeed be more of a purge explosion. Technology is different. Tech companies have real assets. I believe there will be restructurings in this area. And indeed, we’ve seen a number of technological restructurings in just as successful form as last year. I think this will continue.