(Bloomberg) -- Just months after FTX’s collapse drew some of the largest distressed investors to crypto, the spiraling industry has thrown up a new high-profile target: Genesis. 

While the lender only filed for bankruptcy less than two weeks ago, the broker XClaim has confirmed three trades for its claims with an average value of over $1 million, in the range of 25% to 35% of face value, according to Chief Strategy Officer Andrew Glantz. A $4 million claim was sold to Jefferies Leveraged Credit Products LLC, according to a Tuesday filing.  

Genesis, a unit of Barry Silbert’s Digital Currency Group, became the latest domino to fall in the crypto downturn after the failures of firms such as Three Arrows Capital and FTX fueled a liquidity crunch. For distressed investors, it’s yet another chance to scoop up crypto claims at sharp discounts in hopes of profiting from any eventual recovery. 

Unlike the prior crypto cases, Genesis filed for bankruptcy with a restructuring plan. It also holds claims including a loan of about $575 million and a $1.1 billion promissory note against DCG, which could potentially contribute to recovery.  

“There’s sort of an unusual feature here where you have DCG group, which is both a large creditor of Genesis and the parent shareholder,” Glantz said. 

Distressed investors began wading into crypto claims in earnest when FTX went under in November with at least $10 billion in liabilities, drawing the interest of large funds including Baupost Group and Oaktree Capital Management, Bloomberg News reported earlier. To creditors with assets stranded at these bankrupt firms, selling their claims is a way to raise much-needed cash to keep operating or deploy back into the market. 

Genesis has said it hopes to implement its restructuring plan no later than May 19, though that still requires approval from a judge and other creditors. The firm also hired a former federal prosecutor to investigate the transactions with DCG entities, raising the prospect of collecting some money from the parent company, which also owns Grayscale Investments. 

“It’s not going to be a quick in and out of bankruptcy, but hopefully it’ll be quicker than FTX and Celsius,” said Bradley Max, a director of the claims broker Cherokee Acquisition. 

In the case of FTX, the price on claims has risen somewhat to as much as 18% on accounts with over $1 million, compared to up to 13% in December, Cherokee’s data show. This was partly due to FTX’s recent announcement it had found $5 billion of cash or tokens it could sell to repay creditors, Max added. 

Even before then, Galois Capital, a well-known crypto fund run by Kevin Zhou, sold its roughly $50 million claim at around 16%, according to a person familiar with the matter who declined to be identified as the transaction was private. Zhou confirmed he’s sold his claim while declining to comment on pricing. 

The valuation of FTX’s assets also pose a uniquely crypto complication. With such volatile prices, it is hard to work out how much those tokens will be worth in dollar terms after liquidation, making their book value especially unreliable. 

Already in the new year, a Bloomberg index of the largest cryptocurrencies has jumped about 46%. Even tokens closely tied to FTX’s disgraced co-founder Sam Bankman-Fried, such as Solana, FTT and Serum, have more than doubled. They still remain far from recouping losses spurred by the exchange’s demise. 

“The company’s overall assets may go up or down based on crypto prices and therefore there may be more dollars to distribute,” said Glantz at XClaim. 

Even then, there is a caveat. “If the company were to actually liquidate them today, it would just flood the market with that token and cause the price to crash,” he added. “So what is the actual liquidation value of that?” 

--With assistance from Laura Benitez, Muyao Shen and Jeremy Hill.

(Updates the fourth paragraph to specify loans and liabiliites of Genesis and Digital Currency Group.)

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