Anthropic’s new raise could mean full payout for FTX creditors: lawyer

Artificial intelligence firm Anthropic has reportedly raised fresh funds from Google and other investors that could potentially boost its valuation to as much as $30 billion — and that’s a “good sign” for FTX creditors given Sam Bankman-Fried’s earlier investment, a crypto bankruptcy lawyer said.

Anthropic is looking to raise at least $2 billion in new funding after Amazon, just last week, poured a $1.25 billion investment into the major rival of OpenAI, The Information reported Tuesday. Anthropic said in a blog post last week that Amazon will invest up to $4 billion in the company.

Google, which had already acquired about 10% stake in the company in 2022, may invest in the new round, according to the media report, citing two sources familiar with the matter. With the new funds, the company valuation could climb to somewhere between $20 billion and $30 billion, the report said.

In April 2022, Anthropic raised $580 million in its series B funding round led by Sam Bankman-Fried, founder of now-bankrupt FTX.

Potential competition for payout

The latest new funds and the potential increase in company valuation could “make it possible” for FTX to log a “100% recovery rate” in assets as part of the failed crypto exchange’s bankruptcy proceeding, Kunchou Tsai, managing partner of Taiwan-based Enlighten Law Group, told The Block.

Tsai, who has helped over 100 clients file their FTX claims, said there should be a lock-up period for Anthropic investors to dispose of their holdings for startup investments like this. “It remains uncertain when the FTX bankruptcy restructuring team would be able to sell off its [stake in Anthropic],” he added. “They might have to wait until Anthropic once goes public unless there are any special occurrences.”

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FTX 2.0 Coalition, a group of FTX creditors, said in a post on X (formerly Twitter) that the potential Anthropic’s increased valuation could put FTX’s stake at around $3 billion to $4.5 billion and that “FTX customers now stand to be made whole.”

Given that Bankman-Fried is facing multiple lawsuits from various entities, creditors, former FTX employees and government agencies, it’d be another point of argument as to who gets the priority in claiming Anthropic stake, according to Tsai. “If Bankman-Fried invested in Athropic personally — not through FTX — then those who sued him separately may argue for priority in paying them first,” Tsai added.

Active trading of claims

Thomas Braziel, partner at 117 Partners and 507 Capital — two firms that specialize in purchasing bankruptcy claims and distressed debt — told The Block that the Anthropic raise is great news for creditors. ​​“If there’s $10 billion of liabilities, just to keep the math simple, and this is $3 billion, that’s 30 cents. I mean that’s huge. That’s absolutely huge,” Braziel said. 

“This is on paper. People need to remember that it is on paper,” Braziel added. “Coinbase and other people, Kraken, raised money at some crazy valuation and now you can buy secondary for like a tenth of that. So that doesn’t mean this isn’t super valuable and clearly a big home run, but it just needs to be tempered with, ‘We’re not liquid.’”

The optimistic outlook in potentially improved recovery has led to active trading of FTX bankruptcy claims in the over-the-counter market. Tsai told The Block that he has helped a few clients in Chinese-speaking regions to sell their FTX claims in the U.S. as “some hedge funds are getting more interested.”

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“Usually those Wall Street buyers would prefer claims worth over $5 million, but I’ve handled a case that successfully disposed of claims worth a bit over $2 million,” Tsai said, adding that one of his clients had secured a 35% rate in selling their claims.

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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