Greater transparency, better risk management and more effective legal frameworks will help to safeguard investors against bankruptcies and rebuild trust in the crypto industry, according to experts who spoke Tuesday at Benzinga’s Future of Digital Assets conference in New York City.
In a groundbreaking panel discussion titled “Frontline Stories From Crypto's Biggest Bankruptcies,” experts delved into the complexities and challenges of handling bankruptcies in the cryptocurrency sector at the conference.
Benzinga CEO Jason Raznick moderated a discussion with Thomas Braziel, partner and co-founder at 117 Partners; John Glover, chief investment officer at Ledn; and Andrew Glantz, chief strategy officer at Xclaim.
Raznick, a member of the unsecured creditor committee in the Voyager Digital bankruptcy case, set the stage with his experience on Voyager’s credit committee, highlighting the difficulties in the bankruptcy process and the partial recovery of investments.
He emphasized the complexity and unpredictability of the crypto bankruptcy process, underscoring the need for better systems and regulations.
“I don’t think bankruptcy and crypto are set up to work properly right now,” Raznick said.
The Dynamics Of Claim Buying In Crypto Bankruptcies
Braziel discussed the nuances of buying claims in crypto bankruptcies, contrasting it with traditional corporate bankruptcies.
Bankruptcies expose flawed business models and fraud, thereby adding resilience to the system, he said, emphasizing the importance of understanding market cycles and learning from past mistakes, particularly in secured lending.
Revolutionizing Bankruptcy Claim Trading with Technology
Glantz, representing Xclaim, shared how their platform has become a vital tool in the trading of bankruptcy claims, including those in crypto.
Xclaim’s role is educating both bankruptcy and crypto investors, bridging a critical knowledge gap, he said.
“Bankruptcy is a good opportunity, I think, for the crypto industry to grow up a little bit.”
Glantz’s insights into the process of claim trading and the emotional impact on claimants provided a human perspective on the bankruptcy process. He also discussed the challenges of reconciling the privacy desires of crypto investors with the transparency requirements of bankruptcy proceedings.
Read also: EXCLUSIVE: Crypto-Friendly Bank CEO Defines ‘The Only Thing That Makes Sense’ In Stablecoin Rules
Risk Management, Overcollateralization At Ledn
Ledn has a cautious approach to crypto lending, Glover said, contrasting it with the riskier strategies of competitors.
He highlighted the importance of credit underwriting and risk management, particularly in avoiding directional risk with client assets.
Ledn’s emphasis on overcollateralization and automated collateral calls underscore the company’s commitment to protecting client assets and maintaining trust, Glover said.
“We’re lending dollars at 200% collateralized with Bitcoin. We’ve never had a loss on that book.”
The expert added that his clients are “very happy” because they’re earning an 8.5% yield safely.
Broader Panel Insights: Trust, Transparency And The Future of Crypto
They panelists discussed the need for investors to understand the risks associated with crypto investments and the mechanisms behind yield generation.
Transparency and education are key to rebuild trust in the crypto industry, the panelists said. The conversation also explored the legal and regulatory challenges in crypto bankruptcies, emphasizing the need for adaptation in legal frameworks to accommodate the unique nature of digital assets.
Benzinga CEO Jason Raznick moderates a panel on crypto bankruptcies Tuesday at the Future of Digital Assets conference in New York City. Photo by Piboon Thongtanyong.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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