(Bloomberg) -- The profits were multiplying at a dizzying clip: 50%, 100%, then suddenly almost 200%. Even for long-time veterans at Attestor Ltd., a boutique London firm that specializes in trading distressed assets, this had the makings of a score to remember.

The trade — targeting the remains of Sam Bankman-Fried’s once-vast cryptocurrency empire — became a popular one in distressed investing circles last year.

Many of Attestor’s rivals jumped in, too, and as the value of crypto coins skyrocketed once again, so did the value of the assets they had purchased at rock-bottom prices from clients of Bankman-Fried’s, desperate to recoup whatever they could. Lawyers running the bankruptcy now estimate the clean-up will deliver investors 100% of the money frozen in FTX when it failed.

But this is where the story gets messy for Attestor — and its grip on a chunk of that windfall becomes a bit fragile. The seller of one of the biggest FTX accounts it purchased — an obscure Panamanian firm called Lemma Technologies that’s controlled by an embattled South Korean trader — has opted, so far at least, to keep the claim for itself.

Attestor’s lawyers have argued in a New York court that this is a clear case of “seller’s remorse.” Over the years, other bankruptcies have brought handsome returns, but rarely, if ever, so rapidly. Back in June, Lemma agreed to a sell price of $58 million, according to evidence submitted to the court. Today, the claim is expected to pay out $165 million.

Attestor’s trade, in other words, was so good, it could be bad.

The FTX bankruptcy is unusual for distressed firms in another crucial way: they’re buying up claims on client accounts, a murkier and riskier transaction than the typical purchase of defaulted bonds or loans — debts that are usually backed by clear legal documentation.

Lemma has yet to publicly explain its side of the case and hasn’t filed a defense against Attestor’s New York suit. Lemma won’t “proceed with the transactions or otherwise honor the trade confirmations,” Attestor attorneys said in their filing, “unless compelled by force of law to do so.” 

That Lemma’s principal investor, Junho Bang, is currently facing charges in a separate matter back in Seoul only adds to the drama — and confusion.


Few details are known about Bang and his business dealings, beyond court filings in South Korea and New York. Emailed requests for comment from Bloomberg News sent to three addresses shown in the court documents for Bang and registered to accounts that he controlled at FTX did not receive a response. A representative for Attestor declined to comment when contacted by Bloomberg News.

Attestor, which operates from offices near London’s Hyde Park, is no stranger to starting court battles. The firm could be one of the biggest winners from the bet on FTX’s bankruptcy assets, having purchased around $400 million worth of claims. Founded more than a decade ago by German investor Jan-Christoph Peters, the firm is known in financial circles for guarding its privacy and taking a pugnacious approach to deals. 

Read More: Hedge Funds Set for FTX Win

A tried-and-tested legal framework in distressed-debt investing means buyers can be relatively certain of the provenance of their purchase and where they’ll rank when cash from the bankruptcy pot is doled out.

But as is often the case when comparing crypto to the more traditional operations of the financial industry, things are different with FTX.

The exchange didn’t have debt in the traditional sense, so funds bought the rights to customer accounts — mostly small claims backed by the holdings of part-time traders and enthusiasts.

Gathering up those accounts is a lot more complicated than buying distressed bonds. Claims are often negotiated directly with aggrieved former customers of the defunct platform. And the claims are all unique, holding differing blends of hard currency and cryptoassets.

In the court documents, Attestor said it reached a deal in June with Lemma to buy the bundle of FTX claims, thought to be one of the largest.

Bitcoin Rebound

Now — after this year’s meteoric recovery in crypto and a successful push to track down billions of dollars of FTX assets — the claims are set to pay out in full. Attestor is anxious to get the deal over the line and its lawyers said the firm is willing to “immediately consummate the transactions,” according to the lawsuit.

But after watching the value of the claim click ever higher over the past eight months, Lemma’s Junho Bang apparently isn’t rushing to conclude the deal. He also has a much bigger case on his mind.

He’s accused of stealing digital assets from a lender called Haru Invest and was indicted by South Korean authorities in February. While that case and Attestor’s suit over FTX claims are playing out independently, Bang is at the center of both.

Back in the high-flying days of crypto, Haru Invest operated a platform that offered returns as lofty as 50% in some cases. Those kinds of yields were common before the collapse of FTX in November 2022 triggered a global cascade of crypto bankruptcies and scandals.

At the time, Haru said it had pulled its assets off FTX and wasn’t impacted by the downfall of the exchange. Seven months later, it froze customer redemptions and said it had problems with a service provider, called B&S Holdings, that had sent reports with false information.

B&S described itself as a quantitative trading company for cryptoassets, according to a cached version of its website from July 2022, investing in a range of tokens including FTX's now-defunct FTT.

Emailed requests for comment to B&S Holdings did not receive a response.

In a social media post last month, Haru identified Bang as the majority shareholder of B&S, while the cached version of the B&S website lists “JH Bang” as a partner with the firm. Bang personally transferred his FTX claim to Lemma in January 2023, according to the court documents seen by Bloomberg News.

Emails sent to Haru Invest did not receive a response.

--With assistance from Steven Church and Youkyung Lee.

©2024 Bloomberg L.P.