The remnants of Sam Bankman-Fried's former FTX Group crypto exchange are attracting some top-notch bad debt and bankruptcy recovery funds.

They try to buy the claims of customers cheated out of their deposits at a fraction of the face value and then redeem a higher amount in the bankruptcy proceedings.

Baupost Group and Oaktree Capital Management, among others, are reported to have been making inquiries about customer balances stuck on FTX.

Citigroup, Cowen, Seaport Global Holdings and others are said to want to act as facilitators in the resulting market.

Open legal questions

"A lot of the big players in the distressed debt market are focused in this space," said Joe Femenia, senior manager at Jefferies Financial Group, which also plans to broker such FTX debt.

Baupost, Oaktree and Citi declined to comment on the matter.

Cowen and Seaport did not respond to requests for comment.

The collapse of FTX and other crypto companies raises some new legal questions, such as whether the amount of the claims is based on the price of the crypto assets at the time of bankruptcy or whether it fluctuates with their current market value.

FTX was big enough -- the top 50 creditors are all over $20 million -- to spark broader interest.

$10 billion in debt

FTX reorganizers have found more than $1 billion in digital assets and $1.2 billion in cash.

The insolvent company's liabilities total $10 billion.

How much can be reaped from the company's other assets is still unclear.

"We expect there will be more and larger transactions," said Jay Conklin, a partner at Park Walk LLC, an FTX receivables broker.

"As the market forms, I guess holders will get used to the discounts instead of thinking they're getting 90 cents [on the dollar] back."

So far, only small transactions have come about, but there are already negotiations for claims in excess of $100 million.

So far, these have been valued in a range of five to 13 cents per dollar - which is apparently more attractive for some of the affected FTX customers than waiting for years and uncertain bankruptcy proceedings.