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Bitcoin The Almighty Buck

FTX Customers Poised to Recover All Funds Lost in Collapse (nytimes.com) 44

Posted by BeauHD from the successful-recoveries dept.
Lawyers for the defunct cryptocurrency exchange FTX said customers would receive all the money they lost when the firm collapsed in 2022 and receive interest on top of it. "But the recoveries come with a caveat," reports the New York Times. "The amount owed to customers was calculated based on the value of their holdings at the time of FTX's bankruptcy in November 2022. That means customers won't reap the benefits of a recent surge in the crypto market that sent the price of Bitcoin to a record high." From the report: The announcement was a landmark in the attempt to recover the $8 billion in customer assets that disappeared when FTX imploded virtually overnight, setting off a crisis in the crypto industry. Under a plan filed in federal bankruptcy court in Delaware, virtually all FTX's creditors, including hundreds of thousands of ordinary investors who used the exchange to buy and sell cryptocurrencies, would receive cash payments equivalent to 118 percent of the assets they had stored on FTX, the lawyers said. Those payments would flow from a pool of assets that FTX's lawyers have pulled together in the 17 months since the exchange collapsed, the lawyers said. [...] It will take months for the payouts to begin. The plan must be approved by the federal judge overseeing FTX's bankruptcy, John T. Dorsey.
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FTX Customers Poised to Recover All Funds Lost in Collapse More

FTX Customers Poised to Recover All Funds Lost in Collapse

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  • Made whole in dollars because crypto increased? (Score:5, Informative)

    by klipclop ( 6724090 ) on Wednesday May 08, 2024 @01:42AM (#64455814)
    If I under this whole fraud saga: FTX pissed away customer assets by giving unlimited interest free loans to their partner firm Alemeda. With what crypto and cash funds were left and recovered -- unsecured customers will be made whole in dollar terms because they got EXTREMELY lucky and crypto prices have surged. IMO this is a very unusual and very lucky situation. Had the FTX fraud gone on longer, I'm fairly sure Bankman would have lost it all.

    • Re: (Score:3)

      by galabar ( 518411 )
      The will be made whole based on the value in November 2022. That could still represent a huge loss (depending on what each holder would have done).
    • Not made whole. Made whole would have been getting the same amount of what was taken given back to them. If I stole a Van Gogh painting from you and gave you the price you bought the Van Gogh painting for back, by selling the painting that was stolen for 5 times the price you paid, that is not being made whole. Made whole would be getting the same thing stolen back, not a dollar equivalent to its value all the back when it was stolen.

    • Not just because of crypto going up. Some of the other investments they made turned out to be quite profitable.

      It was still fraud and mismanagement. They just picked a few winning numbers.

      It's like if you took all your investors money and bet it on the Kentucky derby -even if you won, it is not a valid investment strategy.

    • No, it's worse than that. It wasn't just crypto that surged, a lot of their other investments did well too. They likely would have been fine. The case ultimately makes an example out of SBF and just funnels tons of money into the same old finance bros and lawyers, shocker I know.

      It's really . . . . bad. Like everything that happened is basically the opposite of what you'd want, even though they're getting their money back, the individual customers are getting wildly screwed. Many sold their bankruptcy claim

  • Let's call it "Cry-Pto".
    Worthless and wasteful.

    • But, the people like myself who did it properly and self custodied their Bitcoin have no problem. No tears, just enjoying something that's both useful and valuable.

      • Define "useful" and "valuable" in terms that don't include speculation, tax evasion and illegal purchases.

        Personally I'm fine with with all of those things but to me crypto won't be useful until I can reliably purchase everyday goods with it and it won't be valuable until I can be certain it won't lose 99% of that value overnight.

        • Define "useful" and "valuable" in terms that don't include speculation, tax evasion and illegal purchases.

          All I can say is, I personally use Bitcoin to buy goods or services. I'm doing this without avoiding my countries tax obligations and I'm not breaking any local laws.
          I use layer 2 technology(Lightning) where available but I also occasionally use on chain transactions which are still reliable and cost effective for me.

          Admittedly, I have invested in understanding this technology but it's relatively

          • All I can say is I use money.

            You know, the stuff I can give to a baker and get bread and pay my bills with. Admittedly I haven't invested in understanding this technology because... well, it's fucking money.

            Good luck with your thing though.

          • What kinds of places have you been using it with?
            Normal supermarkets or online places named after South American rivers?
            I don't feel like looking it up but what was the change in price between Jan 2024 and Jan 2023; 1%, 10%?
            And what country are you in, a developed one? Europe?
            Or Liberia or Micronesia?

            • What kinds of places have you been using it with?
              Primarily online purchases at places that sell things like VPNs and hosting but also food products, electronics and clothing. Plus I have been pleasantly surprised by local tradespeople and businesses for their willingness to privately accept bitcoin when i've offered it for payment.

              Normal supermarkets or online places named after South American rivers?
               I didn't claim to exclusively use bitcoin. I still begrudgingly use the local currency at the local su

  • Scam Me, Baby (Score:4, Funny)

    by walkerp1 ( 523460 ) on Wednesday May 08, 2024 @02:06AM (#64455852)
    Holy crap! 118% assets returned? I've been doing this getting scammed thing all wrong. Somebody please point me to the next FTX-style investment and a Silicon Valley Bank to use as my golden windfall.

    • Re:Scam Me, Baby (Score:5, Insightful)

      by misnohmer ( 1636461 ) on Wednesday May 08, 2024 @02:12AM (#64455870)
      Give me your money. I will buy lottery tickets for 50% of it. If any of the tickets win big, I'll get you 118% of your investment. Otherwise, well, we tried. This is so much better than FTX as you get your 118% (if you get it of course) a month later, don't have to wait years to find out.
    • The extra cash will be used to pay interest to the companyâ(TM)s more than 2 million customers, marking a rare outcome since creditors typically receive just pennies on the dollar in US bankruptcies. âoeIn any bankruptcy, this is just an unbelievable result,â said FTX Chief Executive Officer, John Ray, who took over the firm when it collapsed into bankruptcy.

  • Bitcoin was $17,600 in Nov 2022. 118% of that is $20,800. But Bitcoin is currently trading at $62,300.

    They're not getting 118% of what their money would be worth now if they'd kept it in crypto. They're getting 1/3 of it.

    118% is about what the stock market has returned since Nov 2022, though. (S&P 500 4390 --> 5190).

    • Bitcoin was $17,600 in Nov 2022. 118% of that is $20,800. But Bitcoin is currently trading at $62,300.

      They're not getting 118% of what their money would be worth now if they'd kept it in crypto. They're getting 1/3 of it.

      118% is about what the stock market has returned since Nov 2022, though. (S&P 500 4390 --> 5190).

      Were I involved in the FTX situation, I'd recognize that 118% is better than 118% and very few fraud schemes have that level of return after the lawyers get involved.

      • It's statistically way above average return for a fraud scheme. But that doesn't change that it was a fraud scheme, and SBF deserves every day in his cell.

        Let's use another example. Say I gave you $100k to invest in Carnival at the start of 2023. You only invested half the money, and pocketed the other half. Now, Carnival had a spectacular year, increasing to 228% of its Jan value. So, my overall investment would have paid off at 114%. I'm up $14k. But I *should* have been up $128k. That's the diffe

        • No argument, except that SBF is no more obligated to compensate lost "unrealized gains" than he would be allowed to avoid paying "unrealized losses".
          After all, investments never have guarantees.

  • In the interim, FTX have declared the leaf as their temporary currency. However, due to an overabundance of leaves & potential resulting inflationary pressures, they have decided to mitigate this with a global exfoliation programme. Only temporary until they can get the crypto working again. This is the crypto they're talking about, right? https://en.wikipedia.org/wiki/... [wikipedia.org] (Or is this the wrong pain in the arse?) Also, they may have to divert electricity from hospitals, care homes, & schools in orde

  • 2008 (Score:2)

    by jmccue ( 834797 )

    Many FTX customers were very rich, so of course the owner is spending decades in jail and the rich people are getting a full refund.

    We wanted to see the execs that caused the 2008 housing crises crash got to jail, instead they were able to keep the billions they reaped from many of us. Also, were is my refund of the value loss to my 401k ?

  • What do you think the lawyers' cut will be? Yes, about 30%. So the victims get 30% cash back on assets worth 300% more now than when the fraud was committed. The lawyers say it is full compensation when it is not. The lawyers say settle, be grateful, when it is actually the asset inflation that is able to make the payback possible.

    • I am a lawyer. In fact, I'm a bankruptcy lawyer. Nonetheless, this isn't legal advice, but a comment on procedure.

      This wasn't a class action. There aren't big contingency fees.

      The way a bankruptcy distribution of x% works is that each unsecured claimant gets a check for x% of the claim.

      The attorneys get paid separately from the estate as an "administrative expense".

      The unsecured creditors usually don't *have* attorneys, although in larger cases such as this, a creditor's committee is generally appointed,

  • Plain and simple.

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