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Struggling cryptocurrency investor ordered to repay $1.9 million stolen from bankrupt firm
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A Delaware court has ordered a high-profile cryptocurrency investor to return nearly $2 million he allegedly stole from a failed company he oversaw.
Thursday’s decision largely confirmed 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 filings, cryptocurrencyleveraged loans and high-risk stocks,” as well as a Bermuda hotelier.
According to the Delaware Court of Chancery ruling, Braziel spent nearly $1 million of company funds on items such as a sapphire ring, diamond earrings, a watch and “luxury hotel stays, clothing, artwork and other luxuries.”
Braziel and his attorney did not immediately respond to requests for comment.
Braziel has risen to prominence on digital currency social media and Wall Street, describing himself on X as “the guy in trouble with cryptocurrency.” His firm 117 Partners specializes in brokerage failure claims, a business that had boomed in the wake of the 2008 financial crisis but had remained generally dormant in recent years.
However, claims from failed cryptocurrency firms, particularly from FTX, the failed exchange founded by Sam Bankman-Fried, have revived the market. Recently, some have proven highly profitable. In May, FTX said account holders would receive 118 cents on the dollar for their claims, a windfall for crypto investors devastated by the company’s collapse more than a year earlier.
Even before FTX agreed to repay so much to creditors, Braziel had positioned itself to mediate millions of dollars of those claims: 117 Partners said on its website that it had mediated more than $300 million in FTX claims. In December, the New York Times characterized it in an article about the “hot new market” of bankruptcy filings in the cryptocurrency industry.
Braziel was initially appointed as a receiver in 2016 to liquidate Fund.com, where he had previously been 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 wrongdoing as bankruptcy trustee, and the court appointed a special judge to investigate the allegations, which turned out to be true.
In addition to buying gems 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 receivership.
The court noted that Braziel ultimately largely conceded to the special prosecutor’s findings, although he initially sought to cover his tracks. “Braziel also sought to conceal his independent conduct,” citing bank records he altered for tax purposes, the court said.
On Thursday afternoon, Braziel posted on X: “I’m on a wave, I’m very lucky, but I won’t let go.”