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FTX creditors will make money on bankruptcy
- linotype 2y agoThe people that sold their stakes to people like Scott Galloway must be kicking themselves. Great trade. https://www.youtube.com/watch?v=TPFiRlZaclQ https://www.youtube.com/watch?v=TPFiRlZaclQ
- ignoramous 2y agoGalloway says he bought $1mn claim for $270k. That's a nice ~4.5x profit.
- fsckboy 2y agolooking at individual investments is fallacious, need to look always at your entire portfolio (i.e. not just winning lottery tickets)
- arder 2y agoWhile that's true, if you have a good understanding of bankruptcy law, and a reasonable understanding of what assets FTX owned you could make a reasonable guess of how much money the eventual bankruptcy would pay out. Since the administrators publicly published what assets there were quite early on I think it's fair to say $270k always looked like a good deal.
- Scoundreller 2y agoMiami-Dade County did that: sold their $17m claim (because they owned the stadium that they sold naming rights to FTX) for probably about a third: > “I’ve never worked on a bankruptcy case that got better. It always gets worse,” said Commissioner Raquel Regalado, a lawyer who now works as a broadcaster. “The idea of just getting out as early as possible seems like a great idea to me. “ Those were some expensive words. And in general, always somewhat expensive words because the hedge fund buyers generally don't work "lose" into their models. https://www.miamiherald.com/news/local/community/miami-dade/article274981761.html https://www.miamiherald.com/news/local/community/miami-dade/... Selling your claim is only a good deal if the hedge funds are drunkenly stupid, you have no other assets/lending sources and are going to die soon or have debt at payday loan rates.
- ipsento606 2y agoSelling your claim, or a portion of your claim, might also make sense from a risk tolerance / declining marginal utility of money point of view, if it represented a large enough portion of your net worth. Or put another way - if there were an investment opportunity that that had an 80% chance of 3x-4x returns in the next 2-3 years, I might consider investing 25% or even 50% of my net worth in that opportunity. But I certainly wouldn't invest 95% of my net worth.
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- flomo 2y ago[flagged]
- nroets 2y agoThe buyers of these claims often have inside information. By selling during bankruptcy they gambled that the "experts" were wrong and it turn out not to be the case. That's why exchanges often suspend shares during bankruptcy: To make it clear that price manipulation and outright corruption is likely. I have both a claim in FTX and shares in a suspended ("bankrupt") company listed outside the US. I just ride these things out because I don't need the money right now.
- deleted 2y ago[deleted]
- flomo 2y ago[flagged]
- Scoundreller 2y agoFrom a public policy standpoint, you don't want local government authorities taking a quick buck now instead of (on average) more money a few years later. But to an elected politician that might not even be in office in a few years, money now is worth more at any cost than money later. A gov agency is best suited to ride these things out because their cost of capital is among the lowest. Generally dumb for a county to sell an asset to a hedge fund: the HF has to pay more in interest than a county does just to pay you money now. There's nothing to do here except wait, nothing to whip in shape and make more profitable. (Also cities shouldn't own stadiums, that's a gamble on the success of your local sports team and solvency of whomever you sell the naming rights to)
- paulpauper 2y agoYeah, SBF was not lying about FTX having the money. It was not totally worthless as many had assumed. it shows how someone can be dishonest in some ways but honest in others. I too thought he was telling the truth. Had FTX not had money, he would have just shut up. I think such a long sentence may have been a miscarriage of justice in this regard.
- Nursie 2y ago> Yeah, SBF was not lying about FTX having the money. Yes, he was. The reason people are being made whole now is that a couple of years down the line, some of his investments and acquisitions are now worth considerably more than they were at the time of bankruptcy. But at that point t FTX was insolvent and SBF was telling lies all over the place.
- paulpauper 2y agoas early as Jan 2023, before bitcoin had appreciated, $5 billion had already been recovered https://www.forbes.com/sites/dereksaul/2023/01/11/bankrupt-ftx-has-recouped-over-5-billion-in-liquid-assets-but-still-has-billions-more-to-go-to-meet-liabilities/ https://www.forbes.com/sites/dereksaul/2023/01/11/bankrupt-f... Anthropic was another $1 billion
- Nursie 2y agoEven that article says the assets there are not enough to come close to liabilities. FTX was insolvent at that time.
- paulpauper 2y agoIt did not help that CZ triggered a run on the assets at the worst time; otherwise it likely would have been fine. When FTX ran out of money, every depositor instantly became a creditor. I doubt this is unique to FTX. many exchanges may have some shortfall between deposits and credits.
- tiffanyh 2y agoDumb question: why are creditors getting paid more than they are owed?
- teractiveodular 2y agoInterest. From the article: > "We are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors." For what it's worth, the article also points out that Bitcoin has gone up 260% since FTX's failure, so if FTX had not collapsed, somebody hodling their BTC there might have earned 260% instead of 19%.
- listenallyall 2y agoThe creditors are only "earning" 19%. The first 100% is their own investment. The comparison you are trying to make is 260% vs 19%, not 119%.
- teractiveodular 2y agoThank you, corrected!
- Nursie 2y agoThankfully for the investor, the non-cryptocurrency assets generated enough return to make them whole and even give them a profit.
- ToValueFunfetti 2y agoIf bitcoin is up 260%, the non-cryptocurrency assets must bringing the average return down, right?
- Nursie 2y agoFrom what I’ve read there wasn’t really that much bitcoin left by the time they were shuttered, and their own tokens were worthless. That’s part of the whole issue - SBF was just doing whatever he felt like with customer assets and balances. Plus inventing assets out of thin air. The profit that people will get has largely been driven by FTX’s investments in AI stuff, which turn out to have done great. Think about it this way (exaggerated to make a point) - you give SBF $10k to buy Bitcoin on FTX. You expect him to have that amount of BTC locked away somewhere for you. Instead he blows your $10k on houses for himself, giving money to politicians, sponsoring sports grounds and buying stuff for his parents. He’s throws some of it into AI firms. At the time of bankruptcy all he’s actually holding for you is $200 of BTC. That goes up in value to $460. W00t. But wait, two years later those few million he threw at AI seemingly for shits and giggles are now worth a few billion, so you can be made whole and even get a little profit.
- whatever1 2y agoNow imagine if we did not put sbf in jail and he kept leveraging. By now it would have been a quadrillion dollar company.
- Analemma_ 2y agoThat's not how any of this works. If you steal money from the cash register to bet it all on black in Vegas, you're still going to jail even if you happen to hit and be able to return what you took.
- chimert 2y agoYeah but what if you return 119% of what you took?
- JumpCrisscross 2y ago> what if you return 119% of what you took? You go to jail. It’s not a hypothetical.
- qingcharles 2y agoYou can go to jail for stealing "nothing." Two Illinois cases I'm thinking of: https://casetext.com/case/people-v-kotlarz https://casetext.com/case/people-v-kotlarz https://case-law.vlex.com/vid/people-v-haissig-2110726-885408110 https://case-law.vlex.com/vid/people-v-haissig-2110726-88540...
- FireBeyond 2y agoThat is, coincidentally, how we still have FedEx. Fred Smith taking the company's last $5K to Vegas and luckily winning $27,000. Mind you at that point, pilots were putting fuel on their personal credit cards, payroll had been bouncing for weeks. (Funnily, some people here think he did the right thing.)
- vlovich123 2y agoThat’s the story he likes to tell and it’s repeated uncritically often enough, but I find it stupendously unlikely to be reality that he converted 5k into 27k playing blackjack of all games. And that that one week was enough to see him through to close 11m at an unspecified future date after having burned 80m getting the company up and running. I chalk it up more to myth building and would love to see a reporter that dug into that story to know what actually happened.
- zoklet-enjoyer 2y agoI bought a Solana NFT that I never took off of FTX. Anyone know if I can do anything about that?
- namjh 2y agoThere was an NFT section in the claim form so certainly they are aware of but I'm not sure it's still open
- tim333 2y agoThe deadline has passed but the ftx site says: >Can I still file a claim? >The Kroll Portal will remain accessible after the Bar Date to amend or file a claim. Absent order from the U.S. Bankruptcy Court for the District of Delaware, any claims filed after the bar date may be disputed. So it might still be worth filling out the form - who knows.
- coffeebeqn 2y agoWhat’s the current fair market value of a “solana NFT”?
- zoklet-enjoyer 2y agoI dunno. $1? I paid like $200. I just kind of want the picture back. I didn't have a Solana wallet when FTX was crashing and didn't want to go through the hassle of making one. I got all my other stuff off there that was actually worth something
- eftychis 2y agoThe statement is misleading. People are making 18% interest on the value of Bitcoin et al. at the value of 2022, which is less than $20k. Now that is $60k, back to the value levels of 2021. Thus, the only reason there is interest is that the cryptocurrencies found gained back their value, and the bankruptcy court gets to consider the values when the bankruptcy started in 2022, not current/before 2022 values.
- jjeaff 2y agoDoes it not also have to do with the increased value of some of the other assets FTX bought? I believe SBF invested a large amount in some AI companies.
- manquer 2y agoFTX invested $500M in Anthropic for 8% (at the time) and the bankruptcy estate sold 2/3rds of that for $884M, while it is tidy sum, it doesn't move the needle much in the overall money owed to creditors of $11.2B . The estate has recovered around $16B of the money, or basically close to half of the assets at the time, the bulk of the money is coming from bitcoin tripling in value, to put it another way if Bitcoin was same prices as 2022, then they would have only recovered ~ $5B or FTX continued operating without being frozen by the courts, they would need come with $33B to make their depositors whole in Bitcoin.
- JumpCrisscross 2y ago> bulk of the money is coming from bitcoin tripling in value Source? I thought FTX's estate barely held any crypto.
- manquer 2y agoThey barely held any bitcoin or ether in their assets 0.1% and 1.2% respectively that customers had bought or deposited on the platform, they did hold a lot of crypto assets though. Notably SOL sales accounted for close to half of recovered money here is a link to the last batch of $2.6B sale they made in May 2024 (https://dailycoin.com/ftx-estate-sells-last-2-6b-of-heavily-discounted-solana-tokens/ https://dailycoin.com/ftx-estate-sells-last-2-6b-of-heavily-...) There was controversy from creditors over the steep discount, a discount itself is not unusual given the size of the block sale and the fact the tokens are locked for 4 years with monthly vesting. Naturally there was dispute on how much discount is acceptable . while Solona has grown 10x in price since the bankruptcy, it is not like people who had deposited SOL tokens are now covering for other deposits with just their holdings. What depositors assets had against their accounts at the time had little correlation to what FTX itself had as assets, the two most popular tokens Bitcoin (0.1%) ETH(1.2%) assets were lot less than what they would have been just storing the customer tokens as is. It is simpler to talk in bitcoin price given its popularity and use as baseline rather than prices of tokens and assets actually held by FTX itself or by users on FTX.
- Frummy 2y agoI’ve been getting legal mails for the entire process since I had like 0.000000000003 cents in a wallet called blockfolio that was acquired by FTX which was pretty funny to follow
- kwar13 2y agoI keep seeing this "headline" and it is the very definition of fake news. If you held SOL on FTX they will pay you at the Nov 2022 prices which was under 9 per SOL. It is trading at ~150 now. Bitcoin was trading at 17k, it is now 62k. FTX creditors didn't hold US dollars. They held crypto. A good chunk didn't even buy any of the crypto WITH US dollars. Many are in countries that US dollars is not legal tender. Guess what they're getting back for their claims? You guessed it. US Dollars.
- a_dabbler 2y agoI held mainly dollars on the exchange at the time. I see your point regarding the crypto holders on the exchange though.
- graeme 2y agoThat's putting it a little strong. FTX went bankrupt. You might normally expect to lose a substantial portion of your assets when that happens. To instead get back everything in dollar terms with a gain is remarkable. If you sent crypto to FTX legally you no longer owned them. You owned a claim to $X on FTX. It just wasn't analogous to a regulated broker where the client is the legal owner of a security. Iirc the contract with FTX is the creditors sold their stake to FTX. It is valuable to explain that these creditors underperformed simply holding crypto but calling it "fake news" really misrepresents the situation.
- kwar13 2y agoNot really. You owned a claim to the very specific asset you deposited in an exchange, which is how segregated accounts work. Why US Dollars? FTX.us was domiciled in the US but FTX.com was in Bahamas. Why not some other arbitrary currency? Why not Bahamian dollar? Why not in Bitcoin? FTX has paid close to 1 billion dollars in fees to army of lawyers, consultants, bankers etc. in what was even at the time an 8 billion dollar bankruptcy. Even if FTX froze in time and did nothing at all, its assets would've recovered completely that 8 billion gap in its funding. It's been a boon to everyone involved and they're taking full advantage. I have no sympathy for FTX. It was a clear case of theft. However the creditors are getting robbed twice. Once by FTX, once by the bankruptcy proceedings.
- olalonde 2y agoImagine spending 25 years in federal prison knowing you might have avoided it if only you had not filed for bankruptcy.
- paulpauper 2y agoblame CZ. had he not triggered the run on FTX assets by making those tweets, likely FTX had enough assets to survive until Bitcoin began its rebound.
- immibis 2y agoThis wouldn't help because it would still not have enough Bitcoins to pay its customers.
- paulpauper 2y agothere are hundreds of exchanges. how many of them are fully collateralized? doubt all of them are.
- kelnos 2y agoThen they're not exchanges. They're just places to put assets while the people who run them do whatever they want with those assets.
- olalonde 2y agoThose that aren't fully collateralized are committing fraud.
- immibis 2y agoOr they are banks. Fun fact: I got a permanent ban from the r/cryptocurrency discord for saying exactly this.
- kelnos 2y agoI see a disturbing trend in your posts: you seem to want to place the blame anywhere but on SBF's shoulders, where it rightfully belongs. Exchanges shouldn't be like banks. FTX should have had customer assets on hand to return, no matter what. That's how regulated exchanges are supposed to work. But this is crypto-land, where nobody does the right thing.
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- j01 2y agoI imagine few on HN would fall for this comment, but this is a recovery scam. https://consumer.ftc.gov/consumer-alerts/2022/11/worried-about-crypto-exchange-losses-dont-pay-money-help-recovering-money https://consumer.ftc.gov/consumer-alerts/2022/11/worried-abo...
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