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Struggling Crypto Investor Ordered to Return $1.9 Million Withdrawn from Bankrupt Company
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A prominent cryptocurrency investor has been ordered by a Delaware court to return nearly $2 million he allegedly stole from a bankrupt company he was assigned to oversee.
Thursday’s ruling largely upheld a court-appointed investigator’s finding that Thomas Braziel had misappropriated funds from a publicly traded company known as Fund.com, which were used to invest in “bankruptcy claims, cryptocurrencyleveraged loans and junk stocks,” as well as a Bermuda hotelier.
Braziel spent nearly $1 million of company funds on items including a sapphire ring, diamond earrings, a watch and “luxury hotel stays, clothing, art and other fine items,” according to the Delaware Chancery Court ruling.
Braziel and his attorney did not immediately respond to requests for comment.
Braziel has gained prominence on social media devoted to digital currencies and Wall Street, describing himself on X as “the struggling crypto guy.” His firm 117 Partners specializes in brokerage bankruptcy claims, a business that grew after the 2008 financial crisis but has been dormant in recent years.
However, claims related to failed crypto companies — especially those from FTX, the failed exchange founded by Sam Bankman-Fried — have revived the market. Recently, some have proved highly lucrative. In May, FTX said account holders would receive 118 cents on the dollar for their claims, a blow to crypto investors devastated by the company’s collapse more than a year earlier.
Even before FTX agreed to pay creditors that much, Braziel had positioned himself to broker millions of dollars in claims: 117 Partners said on its website that it had brokered more than $300 million in FTX claims. In December, The New York Times reported introduced him in a story about the “hot new market” of cryptocurrency bankruptcy filings.
Braziel was initially tasked as receiver in 2016 with liquidating Fund.com, where he was previously an investor. He later sought and received court permission to restart the company as an investment vehicle.
Later, a shareholder of the company accused him of irregularities as a receiver, and the court appointed a special magistrate to investigate the allegations, which were found to be true.
In addition to buying gemstones and other luxury goods, Braziel invested the illicit funds, the court found. The Delaware court noted that “many of these investments produced outside gains” that could be recovered by the company he oversaw in bankruptcy protection.
The court noted that Braziel eventually largely admitted the special magistrate’s findings, though he initially tried to cover his tracks. “Braziel also attempted to conceal his own trading,” citing bank records that he altered for tax purposes, the court said.
On Thursday afternoon, Braziel posted on X: “I’m on a roll — I’m very lucky — but I’m not giving up.”