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Bitcoin

FTX Scraps Plans To Revive Exchange, Will Repay Billions To Customers (theguardian.com) 24

Posted by BeauHD from the change-of-plans dept.
A lawyer for FTX said the defunct crypto exchange has abandoned its plans to relaunch, instead opting to liquidate all assets and return funds to customers. The Guardian reports: The exchange, founded by Sam Bankman-Fried, has been negotiating for months with potential bidders and investors, but none were willing to put in enough money to rebuild it, FTX attorney Andy Dietderich said at a bankruptcy court hearing in Delaware. The failed negotiations underscored the fact that FTX was never what it appeared to be, and that Bankman-Fried never built the underlying technology or administration necessary to run the company as a viable business, Dietderich said.

Bankman-Fried has been convicted on fraud charges related to his operation of FTX. He faces decades in prison. "FTX was an irresponsible sham created by a convicted felon," Dietderich said. "The costs and risks of creating a viable exchange from what Mr Bankman-Fried left in a dumpster were simply too high." The company will instead focus on liquidating its assets to repay customers whose cryptocurrency deposits were locked when the company filed for bankruptcy in November 2022. FTX has recovered over $7 billion in assets to repay customers, and it has reached agreements with government regulators who have agreed to wait until customers are fully repaid before attempting to collect on about $9 billion in claims, Dietderich said. While FTX plans to repay its customers, the exchange will calculate their repayment based on cryptocurrency prices from November 2022, when the crypto market was suffering a prolonged slump. "The price of bitcoin has risen to about $43,300 from its November 2022 price of $16,872," notes the report.
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FTX Scraps Plans To Revive Exchange, Will Repay Billions To Customers More

FTX Scraps Plans To Revive Exchange, Will Repay Billions To Customers

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  • What? The customers who were affected by the company's shenanigans don't want their actual cryptocurrency back? Hmmm...

    • I foresee an active secondary market in trading FTX shares for Beanie Babies.

      That's the best hope investors will have for mitigating their losses, compared to the pennies per $10000 they will get from the liquidation.

    • Huh? If you read the article, it's obvious the customers want their actual cryptocurrency back (and not a USD-equivalent amount calculated with the low November 2022 prices), but it's not happening because nobody is foolish enough to foot the bill to relaunch FTX. So, liquidation it is.

      BTW it's worth noting that cryptocurrency was designed to work around the banking system, so the only protection FTX customers have is a bankruptcy claim. So, the price of the assets is determined at the time of bankruptcy

      • You do realize this is slashdot, right? Who reads articles around here! But on your recommendation, I did. The only reference I saw regarding what customers "wanted" was this:

        Dozens of customers have complained that they are being shortchanged by the use of November 2022 prices

        These customers weren't actually asking for the Bitcoin itself, but for the amount of money (dollars) that that Bitcoin would now be worth.

        It's ironic that, as you say, cryptocurrency is designed to work around the banking system and its regulations. But now these same people who owned crypto, want the government system to bail them ou

        • These customers weren't actually asking for the Bitcoin itself, but for the amount of money (dollars) that that Bitcoin would now be worth.

          How presumptuous of them to assume they wouldn't have panic sold or re-invested their Bitcoin in some other brand new doomed shitcoin (or *gag* NFTs) in the interim. Making dumb extremely high-risk "investment" choices (remember Mt. Gox? Pepperidge Farm does.) should be financially painful; they're lucky if they get anything back.

        • >These customers weren't actually asking for the Bitcoin itself, but for the amount of money (dollars) that that Bitcoin would now be worth.
          Does it really matter (if it's actual Bitcoins or the amount of money in USD those Bitcoins would be worth with current prices)? It's the same value, I am sure customers would've been fine with either, their problem is that they are going to get the November 2022 price. This is a side-effect of having an asset pretend to be currency: the law doesn't care about someo

          • Does it really matter (if it's actual Bitcoins or the amount of money in USD those Bitcoins would be worth with current prices)?

            It depends on why you're in bitcoin. If you're in it to escape government oversite, then yes, it absolutely matters. Having to convert to dollars by definition incurs government surveillance and regulation (especially if the amount is over $10,000, since banks are required to report all such transactions to the Fed).

            If you're in it purely as a kind of investment, then no, it doesn't matter at all.

            • Cryptocurrency exchanges are required by law to take your real name before they open an account for you. Yes, I am talking about proper identification using an official form of ID (passport, ID card, driving license) and your ID is verified with a webcam scan. Also, you kind of need to provide your real name to the government to make a claim in a bankruptcy case. So, for FTX customers, anonymity wasn't a thing before.

              BTW the only way to have anonymous cryptocurrency is to create a wallet yourself using l
  • How many Pennies on the dollar will people get back? From what it sounds they will sell bitcoin assests which have trippled in value but probably give as little of people's money back as possible. No one apart of FTX should be allowed to be in charge of this. They already f'ed people over once so a Court appointed manager should be one to sell the assets give every $ back PLUS interest A LOT of interest back to people that got hosed.

    • Where do you imagine that 'interest, lots of interest' will come from? All the assets were seized, and apparently amount to $7BN, and they have investors looking for $9BN - I guess that means they'll get 7/9th of their investments back...

      While FTX plans to repay its customers, the exchange will calculate their repayment based on cryptocurrency prices from November 2022, when the crypto market was suffering a prolonged slump. "The price of bitcoin has risen to about $43,300 from its November 2022 price of $16,872," notes the report.

      Out of curiousity, if the investments all tanked after being seized by gov't officials, would investors demand the current (tanked) valuation, or the 2022 valuation?

      Giving them the Oct 2022 valuation is fair, and once everyone is paid off at that value, the regulators can

      • Re: (Score:2)

        by sjames ( 1099 )

        You assume that they wouldn't have held for a while and sold at a higher value if they had access to their bitcoin. We can't assume that they would have correctly sold high, but we also can't assume that they would have sold that day if they could.

      • Since there isn't enough money to make everybody whole, it doesn't really matter what calculation they used. That is, with the current numbers, you will get 7/9 of your investment (way more than I ever expected they would get back). But if a higher number were used, there's still only $7B to distribute. So sure, you say the value of the BTC is twice as high and give everybody 7/18 of their investment, but in dollar terms, it's the same. I imagine this only matters because some users had assets in cash (
    • As I say above, cryptocurrency was designed to work around the banking system, so the only protection FTX customers have is a bankruptcy claim. So, the price of the assets is determined at the time of bankruptcy (November 2022). But anyway, they might not even get that, it all depends on how much money the liquidation raises. Keep in mind Caroline's gambling lost the equivalent of $ 8 billion in customer funds, so it's dubious whether the liquidation can cover that even with the rise in cryptocurrency price

  • "FTX was an irresponsible sham created by a convicted felon,""

    SBF was not a convicted felon when he created FTX.

    He is now a convicted felon because he created an irresponsible sham.

    I wonder what the prison time will be? 50 years? Let him out when he's 80?

    I have the same question about the unfortunate looking girlfriend. By the way, don't look for a picture of her mother. Out of curiosity I did, and I regret it.

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