They don't have any stronger claim. I assume all customer claims are being treated equally. They bought the claims because they have access to capital, a longer time horizon, and/or a better understanding of the ultimate payout value.

FTX declared bankruptcy in November '22. At the date they did so, any debts anyone had against them were essentially frozen and converted into dollars at the rate of that day. As FTX converts their assets into money, they will pay back all of their creditors in order of priority, with taxes coming first, then customer deposits, then normal debt, and last what remains goes to holders of the stock (leaving out a lot of nuance here).

Normally when a bank (or whatever FTX was) goes under with customer money missing, people lower in the pecking order don't really expect to see any money back, so they would be looking to offload whatever FTX owes them to anyone dumb enough to buy it, at whatever valuation it would fetch. The play is that if you are a savvy investor who knows that FTX holds an illiquid rapidly appreciating asset that might be valuable enough to pay every creditor, toxic FTX debt sold at pennies for the dollar might suddenly look very enticing.

For the private equity to make bank here, then all retail investors have to first be made whole (to the dollar valuation of whatever they held in November 22 at that time), but they are not going to see any profit. The profit goes to whoever who managed to buy debt at low valuations. If Anthropic shares appreciate enough that FTX makes every creditor whole, the rest goes to the stockholders which are mostly FTX employees and also mostly going to be in prison, which is a weird outcome.

Thanks for the detailed explanation! Just to clarify, I think the parent comment must be incorrect? It says “ Any retail investor that sees this as a possibility of getting their money back is about to be disappointed once again”, but from your explanation it sounds like they should get it back, just without profit.

They get made whole the dollar-valued sum of their accounts valued at the prices of 2022-11-11. Note that this was after a significant fall in crypto asset prices, and before they got back up again.

Anyone who had dollars in their account get those back. Anyone who had any crypto will get back significantly less than it was valued even a week before.

Americans and non Americans alike? I’d be surprised if foreign depositors living in the EU would be made whole; Could this ever happen?

Whether a bank deposit or an unsecured creditor, you don't get screwed if you're a foreigner (unless there's a foreign subsidiary, then figuring out who gets what gets complicated and can drag on for years).

Canada's Nortel went bankrupt in 2009, and they only got a ruling on the apportionments between the creditors of the different subsidiaries in 2015:

https://financialpost.com/legal-post/nortel-bankruptcy-judge...

Along with more fights between them over other funds in 2016 and 2017

https://www.bloomberg.com/news/articles/2016-04-05/nortel-ba...

https://www.hugheshubbard.com/news/firm-assists-nortel-in-se...

The accountants/lawyers end up doing well and can suck a lot dry.