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FTX creditors will make money on bankruptcy

cnbc.com

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Re: FTX creditors will make money on bankruptcy

#61

Post by graeme »

kwar13 wrote: post #57

I 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…

That'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.

Re: FTX creditors will make money on bankruptcy

#62

Post by helsinkiandrew »

Analemma_ wrote: post #6
whatever1 wrote: post #5

Now imagine if we did not put sbf in jail and he kept leveraging. By now it would have been a quadrillion dollar company.

That'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.

> That'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.

But, if the investments hadn't hadn't gone bad and FTX hadn't run out of money, it's probable that no one would have known that he had stolen/borrowed customer money. The same probably goes for Elizabeth Holmes/Theranos and Nick Leeson/Barings Bank - its only when things go wrong that misdeeds are found.

Re: FTX creditors will make money on bankruptcy

#63

Post by 8note »

whatever1 wrote: post #24
Analemma_ wrote: post #6

Earlier quoted context omitted.

That'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.

Well if you observe me just for the moment I have on hand 1B, my net worth is 1B and JP Morgan will be willing to lend me 10B. Worst comes to worst tax payer bails again the banks out.

Why do you think the tax payer taking a gigantic loss is a good thing?

I'd prefer that the government fund food for children rather than confidence men/women

Re: FTX creditors will make money on bankruptcy

#65

Post by kwar13 »

graeme wrote: post #61
kwar13 wrote: post #57

I 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…

That'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 con…

Not 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.

Re: FTX creditors will make money on bankruptcy

#66

Post by clhodapp »

tiffanyh wrote: post #38
teractiveodular wrote: post #4

Earlier quoted context omitted.

Interest. 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%.

But this assumes the person wouldn’t have withdrawn their funds, during that period of time.

They could also have withdrawn their funds and invested them in something else.

Re: FTX creditors will make money on bankruptcy

#67

Post by Nursie »

ToValueFunfetti wrote: post #13
Nursie wrote: post #9

Earlier quoted context omitted.

Thankfully for the investor, the non-cryptocurrency assets generated enough return to make them whole and even give them a profit.

If bitcoin is up 260%, the non-cryptocurrency assets must bringing the average return down, right?

From 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.

Re: FTX creditors will make money on bankruptcy

#68

Post by graeme »

kwar13 wrote: post #65
graeme wrote: post #61

Earlier quoted context omitted.

That'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 con…

Not 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…

>You owned a claim to the very specific asset you deposited in an exchange, which is how segregated accounts work.

The company went bankrupt. Bankrupt. They did not have the assets they purported to have.

FTX owed money to a variety of creditors including to crypto traders who deposited. They gambled on handing over their assets to a largely unregulated entity and it went bust.

If a regulated securties broker goes bankrupt you still own the securities. Brokers need to follow very strict laws to be in that position.

FTX faced no such regulation and if you sent them crypto you no longer owned it. FTX did.

And they went bust. What you're saying makes sense if FTX were a US registered securities broker for listed securities on an exchange.

But that wasn't what it was. And they went bust.

Re: FTX creditors will make money on bankruptcy

#69

Post by paulpauper »

olalonde wrote: post #64

Imagine spending 25 years in federal prison knowing you might have avoided it if only you had not filed for bankruptcy.

blame 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.

Re: FTX creditors will make money on bankruptcy

#70

Post by moomin »

eftychis wrote: post #17

The 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.

In yet another “crypto is just speed-running regular finance” moment, they ran the same crock about _Nick Leeson_.

And that was a far from victimless crime as well.

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