Topic: FTX Finally Files For Bankruptcy After Binance Refused Bailout (Read 324 times)

It is a massive mess. Sam Bankman-Fried pleaded not guilty in his recent court appearance in Manhattan but federal prosecutors have charged him with eight different criminal charges which could bring 115 years in prison if found guilty.

Current FTX CEO John Ray has said he will try to identify and clawback every investment made using customer funds. To me that basically means it includes every one of the donations it made to over 110 entities and includes all the investments in made over the years. There is a lack of clarity of those donations and investments came from the company (FTX) or from customer holdings.

You cited perfect examples of lobbying. I am not sure what Sam Bankman-Fried wanted to do by donating to a political party but he did share a stage with ex-president Clinton and got his 15 minutes of fame from that event. I think he got carried away living in a bubble knowing what was going on outside but preferred to live inside imagining it was all going to be alright.

This the part that will be interesting to unfold. The 90 days prior to filing bankruptcy protection does not technically cover anything beyond 91 days but for the sake of avoiding negative publicity charities and politicians will probably be rushing to return donations.

I might have this wrong but what seems to be happening here is the new FTX CEO is trying to allege all investments and donations that were made via any money that originated from the FTX exchange were from customer funds and not from the company profits therefore they should be returned even if they were 2+ years old.

This will be a time consuming process for the investigators and a very painful one for investors. When you look at how long has the Cryptopia situation been going without a final resolution, you can get an indication this will go on for a very long time too.

The most valuable asset that did not go bankrupt after receiving investment from FTX was Robinhood and that is being dragged in to the bankruptcy proceedings too. The $500+ million investment from Bankman-Fried and ownership of shares purchased is being contested by various parties including BlockFi.

That would be an interesting case, clawbacks are common in bankruptcy but never heard of one going back 2+ years.
Days / weeks / months are common. Sometimes even going back a full year, but over that I doubt it would happen.

Too many people would not want to go down that rabbit hole. Funds have been spent, books have been closed and so on.
Even with the Madoff case, they did go back but it was after a lot more then a few million. The time and effort and tacking of funds is too great.

-Dave

Not sure what the value of their collective coffer is, but that might just be chump change for them.  And hey, they could just ask the Fed to print more money to cover the refund (lol).

Yeah, I heard this news as well.  Was it disclosed where the donation funds came from, i.e., was it from FTX's profits or did SBF use customer funds or something else? 

I hate the concept of lobbying; if you ever want a great example of centralized power, look no further than the big, big lobbyists, which would include everything from big pharma to the NRA.  If you've got enough money, you can easily get politicians in your pocket.  That's probably what SBF thought he was doing, and had he not been scamming the whole time he might have "influenced" politicians' views on crypto for the better (albeit in a corrupt way).

Whatta mess, eh?

Another update: According to cointelegraph, FTX made over $160 million in donations to over 110 charities and not-for-profit organisations and now those donations could be returned.

According to reports, Sam Bankman-Fried was the second largest CEO donor to the Biden presidential campaign in 2020 with $5.2 million. Imagine the Democratic Party or the Biden Camp being asked by FTX creditors (and backed by the criminal investigation team) for their $5.2 million in questionable donations to be returned. What will their response be?

An update. FTX founder Sam Bankman-Fried has already entered in to some sort of arrangement to travel to the US without extradition by agreeing to be bailed under house arrest in Palo Alto at the home of his parents. The bail has been set at $250 million but since their home is not worth anything near that amount the deal included a bond where the collateral did not have to meet the bail amount.

Effectively, it seems he has been trusted to stay put at his family home until his court case ends on the basis he did not fight extradition.

so it seems someone got SBF to admit that the client assets that were not in some feature that gave consent to use funds as loans.. was not separated
thus those that just custodianised for non loan/margin/futures stuff that did not consent to their funds being loaned/margined/fractioned, had their funds co mingled in a wallet system that just allowed all users of all services to just take from the wallet(treating alemeda as a customer too), and thus stolen from the users that were not consenting to the margin/loan/futures stuff

i snipped the video to the important question and its only a 6:30 snip
https://www.youtube.com/embed/4o_jPzBZSIo?start=812&end=1140

SBF admits he didnt have code or separate wallets for users of separate services, it was all co mingled and he didnt even, in wake of crash try to separate the user types to be actually fair to user agreement terms of the non consent group. he just let "customers"(he treated alemedia as a customer) to just grab at the one wallet

..
in other interviews. he says after the collapse after withdraws were stopped,  that funds were juggled to make the non consent group of ftx.us whole and if the bankruptcy was to simply open up withdrawals that everyone could get their coin.. but thats looking less true as a separate statement, for other reasons

The latest news in the FTX collapse saga is that BlockFi (which recently collapsed as result of FTX collapsing) is going to sue Alameda Research which was operated by Sam Bankman-Fried. This matter is far from over because it seems every few days something else is released in the media which is connected to the FTX collapse.

It has now been reported by Livemint that according to Reuters, the now collapsed FTX exchange owes over $3 billion to the top 50 investors. On average that equates to each one of those top 50 investors being owed $60 million each. There are other investors too.

On top of that, the exchange has around 1 million customers and their losses will also run in to billions of USD$ but the final figures of total losses have not yet been released.

It is mentioned FTX ex-CEO and founder Sam Bankman-Fried is currently in the Bahamas living in his $40 million mansion.

Yea. I feel very bad for the victim too.

Well as per getting rid of another scammer, that's a good one, just that the repercussions of their dubious actions have seriously affected the mentally of investors and wannabe investors.

Nothing is truly secure even outside the crypto. The most important thing is to know the level of risk involved and the amount of money you are willing to lose. Banks close, insurance companies fail, money saved in your room can also be lost.

I also think CZ shouldn't be held responsible for another man's woes.

It is inevitable, at least the market get rid of another vultures and scam company.  It is always a bloodbath whenever a system get rid of its adversities and often time lesson is learned the hardway.  After this chapter closes, people will learn more things that they have not learned when Mt. Gox goes down.  So I am not dishearten on this FTX fiasco event though I feel sorry for the victims,  I believe, after this dark times, the crypto market will shine more brighter than before  .


Wait for 2024 some months before the halving, the market will start to rally which signifies the start of Bull Market.

Yea, I don't think the bull run will happen anytime soon. A lot of persons are scared of what might happen next. There's a lot of FUD going on at the moment.

It is never a wise decision to store your crypto in an exchange. It is just too risky doing that, if they go bankrupt, your funds will go with it.

 

This one made me giggle for like 10 seconds.

Back to the serious mode: I am sorry for those who lost money. But FTX.com? C'mon man. It was screaming "S C A M" right from the beginning. How teh fuck did it become that famous in the first place I don't even understand.

But then, back in the day btc-e was legit in my eyes and they went down too. So there isn't a secure exchange in this space imo. Any exchange can go down.

In a way it suits Binance if serious competitors are moved out of the way therefore the only way Binance would have gained something is by taking over FTX rather than loan it funds. Having said that, Binance allege there was $8 billion of investor funds misappropriated from FTX therefore like any venture firm should avoid getting involved. FTX denied misappropriating customer funds but the fact is has filed for bankruptcy means something went seriosuly wrong.

The only businesses and people that do not seem to want widespread usage of decentralised exchanges are the big centralised exchanges and people that own them. They make phenomenal amounts of money in commission and these exchanges when they go bust leave behind a trail of human suffering mostly in the form of ordinary investors cutting back on their weekly family expenses instead using their salaries to buy crypto and make the fatal mistake of trusting those exchanges to hold their crypto.

How many years has it been since crypto scams have been a thing? 8? 9? And there's no sign of it all coming to an end anytime soon, because people actually enjoy this one big gambling device - there's a lot of time for high risk high reward gambling, and then there are some periods of cooling off when the market implodes, but eventually it all starts over again, as people like to believe that the next bull run will be big and bring the promised revolution.

Things like hiyps and ponzi schemes exist to this day, and there are fools who engage with them despite the warnings of the professionals, so altcoins and scammy exchanges can be a thing for a long time too.

The inevitable has finally happened!

This is going to have a massive effect in the entire crypto industry and probably even outside of it. Within the FTX group alone, there are already more than 130 companies and affiliated companies that are falling down.

Outside of this huge FTX group, there are also more than a hundred that will be severely affected. This is not even counting individual partners and individual fund holders in any of the FTX platforms and those platforms that are heavily invested in FTX.

Needless to say, this will cause a massive domino effect that would see the entire crypto industry losing trust and confidence among individuals, institutions, and governments.

And all this happens just when the market has already begun to see some nice improvements. Talking of bad timing!

This event scared not only the new investor, but even the old investors. This is really shocking news. No one would have thought that there would be such a bankruptcy situation. The new investors will no longer be interested in giving advice about cryptocurrencies. I hope that this bankruptcy event will not cause a huge decline in the crypto currency market. Otherwise, it will be difficult for the market, which is already in a bear market, to recover.

Something like this was unimaginable before, but has been warned by anyone who really cares about how things are changing rapidly in crypto. CZ is currently cited as one of the main actors in FTX's collapse, but either way it would be wild to call it having that much power to bring down its other rivals.

Whatever the case, have the principle that nothing is truly secure in crypto especially about centralized exchanges. So I really don't think much of anything that might have created new drama for crypto, in fact we still want to maintain optimism on bitcoin rather than overthinking CZ and his decisions.

An ugly situation. Hopefully, it gets solved and not everyone ends up in a ditch.

It really depends on what they decide to do with the assets, whether to liquidate now or later.

ONLY BINANCE

Do you think that there is a looming danger? If in few years time binance successfully becomes the only reputable and popular exchange in the world. Do you think that the monopoly will not affect the cryptocurrency industry ?
I sense that it will be a very big problem because only CZ could make some drastical decisions that may affect or change the direction of the crypto market at any time.
In a nutshell he could single-handedly manipulate the market and bitcoin inclusive.

How many decentralized exchanges are set for this war?

Imagine the second worlds biggest crypto exchange going bankrupt just with a decision from Binance owner CZ.
I read MT. Gox also was even has worst experience than this current exchange outcomes.
People and friends are giving advice to leave crypto as a result of these recent outcomes bin the past days. Its also a pity for those who have both retirement plans and long term saving stored up in FTX, at least they should have had the chance to stop withdrawal but they didn't why? In the history of crypto it will be a sad day to recall. CZ doesn't know he has killed a lot of people, sent million's and billion's of people also to be depressed

things to note.
the coins "loaned" to another company.. are gone.. they will be written off as a fiat amount which creditors will get pennies on the dollar
usually liquidation companies(like SBF business plan was), was to shift good assets out and kill off the dead wood

SBF also resigned before declaring bankruptcy. which technically means he is personally not part of the bankruptcy. just a PAID adviser.
whereby he is using this event to kill off all the dead wood of all the failed busineses he bought up and raided over the last couple years



and so he can continue to set up and be CEO of other companies(usually in bankruptcy the running CEO cant then run as CEO of businesses for X years)

it doesnt seem like he is taking personal blame financially, professionally
..the captain did not go down with the ship

So looks like the chances of bull run this December isn't gonna be likely considering this latest happening of FTX's bankruptcy. This is why I would never going to store my crypto in exchanges. Not even in Binance even if it's so popular and widely used.

Slowly but surely, CZ is starting to take down big competitors like FTX. So I just don't know who's next on the list? Time will tell.

People are capable of easily forgetting important events, so I think the majority of people who have their coins on exchanges won't bother moving their funds from the exchange to their controlled wallet.  Besides Binance, being the only big exchange, will cater more trust from people.  We (the vigilant ones)  all know it isn't safe to store our coins on exchanges but many people aren't like us. So they will stay stubborn and keep their cryptocurrency in exchanges.

This is happening at a very bad time. The market has been down for a long time now, and just when things were getting a little bit better, then this news.
It's really not good at all. Many newcomers who are just beginning to get interested in cryptocurrency will definitely be having a second thoughts.
I feel very bad for the investors also.

Kind of surprised, probably CZ started to think like Elon?

Binance niw stands as the only big exchange but this can be a reason for the people to start realising and never ever trust the centralized exchanges and also bring the decentralisation into the reality in the trading as well.

You can’t trust the CEO
You can’t trust the company
You can’t trust the bank

Not your keys, not your coins.
Thoughts and prayers to anyone who had coins on FTX

Honestly its not a shock at all. Binance didn't look like they were going to really support them and keep them alive at all, I really doubt that they would that to begin with and the talks didn't look real. This isn't anyone but their fault, there can't be "oh it happened because X happened" or whatever, you have customers funds in your exchange, customers trade, you earn money, there is absolutely no way to make a loss out of this. You either get hacked, or you give money that you do not own, and make a mistake because of that, there is nothing else at all. This is purely CEO's and every other worker that had any say in this fault, and nobody else is responsible and after so much money is lost, I hope that they will get some big punishment, CEO should be even jailed for a while.

Very sad news for the overall crypto community, honestly this is reducing consumer confidence so much and worst part is that all this is proving governments and authorities absolutely right. They will try to give these reasons to ban cryptos and bring stringent legislation against Cryptos as well. It's so surprising that exchanges keep the backup assets in assets other than the original assets. All of this also promoting monopoly in the market which is very bad too.

This is another sad day for crypto holder and those people who trusted a centralized exchange to keep their cryptocurrency.  



I believe the SEC will find that Sam Bankman-Fried mishandled the customer fund since I read somewhere that Sam Bankman-Fried give $10B (from customer funds) loan to his own firm Almeda Research[1].  That is a clear proof of misappropriation of funds.  His resignation won't save him from any possible lawsuit.

---

[1] https://www.theverge.com/2022/11/10/23451484/ftx-customer-funds-alameda-research-sam-bankman-fried

By the number of companies connected with them you can easily see how much money they were wasting. You could come to them and say hey' I have a new defi project I want to sell you a stake in my business and you'd get it either in the form of their worthless token or a stable coin that they bought with clients money.
Poor people were depositing their bitcoin there and playing around with positive balance on exchange not knowing that their BTC is long gone because the company barely held anything. You gave them real money and you were getting an IOU and the money was gone into another branch, shell company, investment, sent to Alameda to be leveraged there.

I feel sad that this is impacting bitcoin and some idiot journalists will now say "a bitcoin company went bankrupt, people wanted bitcoin and they got scammed" while it had nothing to do with bitcoin. Bitcoin should be out of this shitstorm as Sam and his company never wanted anything good for BTC. All they wanted to do was pushing defi and their fractional reserve token into the mainstream.

This is going to come to light eventually but I can bet you they were spending some of those "lost" billions on lobbying and bribing in Washington and that's why they're insolvent now.

The collapse of FTX has become a reality and it must be remembered that this could have direct negative consequences for many other projects. As FTX and Alameda begin bankruptcy and reorganization in accordance with Chapter 11, the companies and tokens they invest in are also will face legal and financial problems.

Here is a list of related projects:

Another exchange hits rock bottom. How many more will become big and then end up crashing taking investors funds with them?

FTX has filed for Chapter 11 proceedings today after the company once worth $32 billion has fallen from grace in to collapse. CEO Sam Bankman-Fried resigned from his role but will remain in an advisory position in order to assist the "orderly transition".

The SEC looks to investigate whether Sam Bankman-Fried mishandled or misappropriated customer funds. Things will get more messy before the full facts are revealed.

The PR fallout from this will be highly negative with those new to crypto or just starting to take an interest being the first to change their minds and think crypto is (stereotypically) either unsafe or used for scams.