Are you a victim of FTX? Better to call the Feds.
Or, at most, go! the website they’ve set up to distribute information about their criminal case against FTX founder Sam Bankman-Fried.
U.S. Federal prosecutors asked Manhattan for permission to use a site to communicate with people who had lost money. FTX’s spectacular collapse. U.S. District Judge Lewis Kaplan, who’s overseeing the case, approved it the same day.
According to FTX, bankruptcy filings on November 11, it owes money to more than 100,000 creditors—but that excludes users of its crypto exchanges, FTX and FTX US. This brings the total to over 1 million. Prosecutors argued it would be “impractical” to contact all of them one-by-one.
Prosecutors are required to notify criminal victims before they can plead or sentence them and give them sufficient time to testify if they wish to.
“Based on the number of victims who provide such notice, the court will rule on the manner in which victims will be heard at such proceedings,” Kaplan wrote in his court order.
John Ray, currently CEO of FTX and overseeing its Chapter 11 restructuring, told the U.S. House Financial Services Committee during a hearing in December that “a small number of US customers,” were among the FTX.com users.
“We do know that there were 2.7 million users in the U.S. silo, which again is overstating the customer relationships because people had multiple trading accounts,” Ray said in his testimony. “In the [FTX.com] silo, we had over 7.6 million users—again, overstating the actual customer relationships due to the multitude of accounts by any particular customer. Therefore, we must get to the bottom these customer numbers. But it’s unlikely that many of them will be able to appear at the Manhattan court in person.”
A monthly analysis of active user data is actually by CoinGecko FTX.com was shut down in 2008, with 16% of traffic coming from South Korea, Singapore, and Japan. Although the website was set up to automatically detect if a user was in the U.S. and redirect them to FTX US, the company’s U.S.-based arm, customers in the states still accounted for 2% of all traffic.
To be clear, the Department of Justice’s Criminal case The case against Sam Bankman-Fried, founder of FTX, in the Southern District New York is separate from the Delaware bankruptcy proceedings. Since November.
U.S. prosecutors charged Bankman-Fried on December 9 with eight criminal charges (and unsealed his indictment December 13). This was just a day after he had been arrested in the Bahamas. He was extradited to the U.S. on December 21 and appeared in Manhattan to plead not guilty on all the criminal charges he’s facing.
Federal prosecutors also accused ex-Alameda Research CEO Caroline Ellison, and FTX cofounder Gary Wang. However, both have pleaded guilty. Cooperating with investigators Bankman-Fried in their case.
In FTX’s bankruptcy case, there have been signs that those millions of creditors and users are getting impatient.
Earlier this week, the Ad Hoc Committee of Creditors of FTX Trading, represented by law firm Venable, objected to FTX’s request for more time to compile a detailed account of its assets and liabilities.
FTX originally requested a date extension on November 17. This moved the due date back from January 23 to January 23. FTX then submitted another filing on December 21 asking for the deadline to be moved to April 15.
But the ad hoc committee doesn’t believe the extra time will make a difference.
“It does not appear that the Debtors will ever be able to reconcile their pre-petition books and records (or, more likely, create them in the first instance) and file accurate schedules and statements in these Chapter 11 cases,” attorney Daniel O’Brien wrote in the objection, “and they do not say as much in the motion, supplement, or any of the declarations. There is no reason to extend the deadline under these circumstances.”
He went on to argue that in the Celsius bankruptcy case, the company considered all account holder claims to be against all the debtor’s entities so that it could proceed, leaving the resolution of which specific business owes a claimant money for later.
A similar solution could be helpful in FTX’s bankruptcy proceedings, O’Brien wrote, especially since the company will “likely never be able to file accurate Schedules and Statements under the circumstances.”