Retail Investors Who Jumped into Crypto on FTX Say: Now What?
When BlockFi’s marketing materials and sales rep said his investment was safe and redeemable at any time, he took them at their word.
The aftermath of FTX’s demise
The sudden collapse of the crypto exchange has left the industry stunned.
- A Spectacular Rise and Fall: Who is Sam Bankman-Fried and how did he become the face of crypto? The Daily chronicled the spectacular rise and fall of the man behind FTX.
- Cling to power: Emails and text messages show FTX lawyers and executives struggling to persuade Mr Bankman-Fried to relinquish control of his collapsing company.
- Collateral damage: BlockFi, a cryptocurrency lender catering to ordinary investors craving a slice of crypto-mania, filed for bankruptcy on Nov. 28, struggling due to its financial ties to FTX.
- A symbiotic relationship: Mr. Bankman-Fried’s built FTX in part to support the trading business of Alameda Research, his first company. The connections between the two units are now being put to the test.
“They sold it to me there was no risk,” Mr. Butkus said, adding that he was unaware that BlockFi, which borrowed money from FTX, was so closely tied to the exchange.
Much of the money Mr. Butkus, a self-employed businessman, invested came from the recent sale of his home in Plainfield, Illinois. He hoped to increase his savings with the interest on his BlockFi loan and then use the money to build a new home for his family. Now he wonders where his family, who is temporarily staying with his in-laws, will eventually live.
FTX and BlockFi’s attorneys did not respond to requests for comment.
FTX, founded by Sam Bankman-Fried and once a crypto industry behemoth, imploded last month after some major trading firms withdrew their money amid allegations the exchange used billions of dollars in customer deposits to bail out Alameda Research, the crypto trading firm , which he co-founded. The exchange’s demise was made all the more startling by the fact that FTX had gained an air of legitimacy through a high-profile advertising campaign that showcased its product as safe, fun, and user-friendly.
Federal authorities in New York are now trying to determine whether criminal charges should be filed against Mr. Bankman-Fried and others over the company’s collapse and possible misappropriation of customer deposits. Mr. Bankman-Fried insisted during a media frenzy last week that he never intended to defraud anyone and that he was not fully aware of how much client money was being transferred to Alameda.
Frank Friemel, 39, is among FTX customers wondering if they will get their money back from the now-bankrupt exchange. When he opened an account with FTX in March, Mr Friemel said he knew it was unregulated but wasn’t overly concerned.
He noted that as the second largest cryptocurrency trading platform in the world, FTX is on solid footing with the financial backing of well-known professional investment firms such as Sequoia and SoftBank.
https://www.nytimes.com/2022/12/05/business/cryptocurrency-investors-ftx-blockfi.html Retail Investors Who Jumped into Crypto on FTX Say: Now What?