Thomas Braziel invested some funds but also spent on jewellery, luxury hotel stays, and other luxuries, according to the court findings.
A Delaware court has ordered a high-profile crypto investor to repay nearly $2 million, which he was found to have misappropriated from a failed company he was appointed to oversee.
On Thursday, the court confirmed that Thomas Braziel had taken funds from a listed company called Fund.com and used them to invest in “bankruptcy claims, cryptocurrency, leveraged loans, and high-risk equities,” as well as to support a Bermuda hotelier.
According to the ruling from the Delaware Court of Chancery, Braziel spent nearly $1 million of company funds on a sapphire ring, diamond earrings, a watch, “luxury hotel stays, apparel, art, and other luxuries.”
Braziel and his attorney did not immediately respond to requests for comment.
Braziel gained prominence on social media platforms devoted to digital currencies and Wall Street, describing himself on X as “the crypto distressed guy.” His firm, 117 Partners, specializes in brokering bankruptcy claims, a trade that surged after the 2008 financial crisis but had largely slowed down in recent years.
However, claims related to failed crypto companies, especially those from FTX, the bankrupt exchange founded by Sam Bankman-Fried, have revitalized the market. Recently, some claims have proved highly lucrative. In May, FTX announced that account holders would receive 118 cents on the dollar for their claims, a significant win for crypto investors affected by the company’s collapse over a year earlier.
Even before FTX agreed to repay creditors, Braziel had positioned himself to broker millions of dollars worth of those claims. 117 Partners stated on its website that it has brokered over $300 million in FTX claims. In December, The New York Times featured him in an article about the “hot new market” of crypto bankruptcy claims.
Braziel was initially appointed as a receiver in 2016 to liquidate Fund.com, where he was previously an investor. He later requested and received court permission to restart the company as an investment vehicle.
A shareholder later accused him of misconduct as a receiver, leading to the court appointing a special magistrate to investigate the claims, which were found to be true.
In addition to buying luxury items, Braziel invested the misappropriated funds. 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 also noted that Braziel eventually conceded most of the findings from the special magistrate, though he initially tried to conceal his actions. “Braziel also tried to conceal his self-dealing,” the court said, citing altered bank records for tax purposes.
