FTX caused a lot of nasty spillage and other problems in late 2022. Here we are in 2023, and unfortunately, the final remnants of what will likely be labeled a huge bad actor and very poor player in the crypto economy continues to wreak havoc on the space and on customers.
FTX Customers May Not Get Their Funds Back
It has been suggested by many analysts and traders that the company’s users will not get their money back. That’s right… Whatever funds they lost due to the firm’s mismanagement of their funds are potentially gone forever.
While this isn’t necessarily set in stone yet, it’s being suggested based on information from the infamous Mt. Gox fiasco that took place in 2014. At nearly nine years old (the incident occurred in February of 2014), Mt. Gox filed bankruptcy after allegedly losing more than $400 million in BTC funds, and those bankruptcy proceedings are still ongoing today.
This suggests that filing bankruptcy in the crypto space is a complicated matter. Thus, many industry heads believe that it will be a long time before FTX players ever see a dime of their money, and that’s assuming they ever see anything at all.
St. Johns University law professor Anthony Sabino is confident that while these customers will get some of their money back, they will never see their full stashes again. He also said that many of the assets they stored on the platform are likely to experience further price dips as the FTX drama continues to take hold of the space. In an interview, he commented:
People are going to be waiting on the sidelines for a very long time, and only heaven knows what it’s going to be worth. It does not look good at all.
One of the more unique aspects of FTX is that while its bankruptcy proceedings are occurring, the company is being investigated by agencies like the Securities and Exchange Commission (SEC). Joshua Peck – an alleged expert on crypto risk – says that while these investigations won’t delay the bankruptcy, the judge overseeing the cases is going to pay very close attention to what’s uncovered.
I expect the FTX bankruptcy to take a decade or more for the process to sort out what assets remain and who owns them.
Referring to the Mt. Gox debacle to support his argument, Peck stated that that company exists all over again in something like FTX. He stated:
The Mt. Gox bankruptcy is the precedent here. That bankruptcy started in 2014 and is still ongoing.
The Trouble Began Two Months Ago
FTX first began encountering difficulties in mid-November. This caused the company to seek aid from Binance, who appeared to be on the verge of buying the enterprise.
This didn’t happen however, and FTX has since fallen into oblivion.