Will FTX Customers Fully Recoup Their Money?

Former FTX customers "have reasons to believe they could actually recoup their money," reports CNBC: Bankman-Fried, who could spend the rest of his life behind bars, was found guilty in November on seven criminal counts after roughly $10 billion in customer funds from his company went missing. Some of that money went to pay for Bankman-Fried's lavish lifestyle, but much of it went towards other investments that have, of late, appreciated dramatically in value. Lawyers representing the bankruptcy estate of FTX told a judge in Delaware last week that they expect to fully repay customers and creditors with legitimate claims. Bankruptcy attorney Andrew Dietderich, who works with FTX's new leadership team, said "there is still a great amount of work and risk" ahead in getting all the money back to clients, but that the team has a "strategy to achieve it."

It's a welcome development for the many thousands of customers (reportedly up to a million) who collectively lost billions of dollars in FTX's collapse 15 months ago, when the crypto exchange spiraled into bankruptcy in a matter of days. Given the lightly regulated and unsecured nature of FTX — and the crypto industry at large — those clients faced the real possibility that the vast majority of their money had evaporated. Plenty of failed hedge funds and lenders lost virtually everything during the 2022 crypto winter... [C]rypto was mired in a bear market, with bitcoin trading at around $16,000. It's now above $47,000... FTX's bitcoin stash, which was worth $560 million at the time of the September report, is today valued north of $1 billion.

Bankman-Fried's investments weren't limited to crypto. He also used client money to back startups like Anthropic, the artificial intelligence company founded by ex-OpenAI employees. FTX invested $500 million in Anthropic in 2021, before the generative AI boom. Anthropic's valuation hit $18 billion in December 2023, which would value FTX's roughly 8% stake at about $1.4 billion.
CNBC suggests this could affect the length of Bankman-Fried's prison sentence (which will be determined next month).

There's now also a so-called "FTX IOU" market where investors are selling their debt, CNBC adds. "One financial firm that had lost around $100 million initially sold its FTX debt for 6 cents on the dollar in a new secondary market out of concern that he may never get a better deal. As of December, those claims were going for more than 70 cents on the dollar."

CNBC also reports that FTX "had been negotiating with bidders about a potential reboot of the company, but those efforts were scrapped last month."

Huh

[93 Escort Wagon]

"There's now also a so-called "FTX IOU" market where investors are selling their debt,"

Am I the only one who sees that as "F*CK YOU"?

Re: Huh

[SlashingAllTheDots]

Yes.

No

[paul_engr]

Even if it was there to get back, the lawyers will take their cut first

Re:

[SeaFox]

Betteridge's law works!

The only reason this is possible

[rsilvergun]

Is because of an over inflated price of Bitcoin that isn't real. Several researchers have pointed out that wash trading is inflating the price of Bitcoin and always has. Don't get me wrong there is an actual increase there but it's nowhere near what spot trading makes it look like. So if they start dumping ftx's Bitcoin onto the market in order to recover the actual cash it will expose the lack of liquidity and the wash trading that comes with it and tank the price.

I think money laundering will still keep it around 25 to 30k but that won't be enough to pay off the creditors. Which is why there's a market of people selling their debt

Re:

[kiviQr]

Check mining cost of bitcoin - there is a point around $20 where things will collapse.

Idiots

[fanakabob]

Those FTX idiots can go hell. Sick just sick.

Will Lucy let Charlie Brown kick the football?

[CrappySnackPlane]

Like, seriously, come on...

Re:

[Opportunist]

This time, this time for real. She'll HODL it.

One one hand

[quonset]

People getting their money back from this scamster would be a good thing. On the other hand, not getting their money back from this scamster would be hilarious.

Re:

[arglebargle_xiv]

No, it's a bad thing. It's letting the rubes know that investing in a scam is actually a pretty good bet, so go ahead and pour your money into every other scam that comes along, you can't lose. A massive crash-and-burn would have been a lot more educational and instructive.

Let's look at where "their money" has gone...

[Tony Isaac]

- Lawyers
- Paying off early investors (i.e., Ponzi scheme)
- Super Bowl ads
- Marketing
- Lavish founder lifestyle
- The toilet

I'm sure I'm missing a few.

So why would anyone think they would get *all* their money back?

Re:

[Qwertie]

People don't think they will get it all back, they think they could. Billions of dollars of investments have been known to sometimes go up even more than the cost of Super Bowl ads, lawyers, campaign contributions, charitable donations and ... sorry did you say toilet?

Only because they couldn't replace funds

[DotDotSlasher]

I always thought it was clear that FTX would have been fine (even with all of the not-so-legal activity going on), as long as their investments made money. None of this would have come to light, and the Bahama headquarters would still be chugging along. It just happened that they couldn't cover their investments for too long. As it turns out -- once some time passed -- we find out they would have been fine.

Re:

[Mspangler]

Ah yes, the fine distinction between illiquid and insolvent.

But if some entity had provided the liquidity, do you really think SBF would be learned from the close call and behaved more maturely, or would he have cried out "I am invincible!" like a certain James Bond villain?

Read the fine print, people...

[superdave80]

they expect to fully repay customers and creditors with legitimate claims.

And there you have it. Guess who is going to determine what is a legitimate claim?

Suckers

[sudonim2]

"A group of suckers that was taken for billions of dollars prove there yet remains greater fools to sell on to."

Fixed your headline.

Re:

[noshellswill]

Since all crypt-coyn activity is grift and waste, why have any sympathy for  over-reaching/greedy investors ? The FTX case  needlessly  consumes huge amounts of court-time better spent on serious crimes. Who needs  tax-supported courts to rule on alley-way crap-shoots ?  Courts should make it clear that any activity remotely connected to crypt-coyn has no more legal standing or access to  judicial resources than that alley crap-game. 

Press [x] for doubt

[BigFire]

.

No doubt

[alleycat0]

Betteridge's law of headlines applies here.