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FTX creditors will make money on bankruptcy

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Re: FTX creditors will make money on bankruptcy

#81

Post by Nursie »

paulpauper wrote: post #74
linotype wrote: post #2

The people that sold their stakes to people like Scott Galloway must be kicking themselves. Great trade. https://www.youtube.com/watch?v=TPFiRlZaclQ

Yeah, 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.

> 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.

Re: FTX creditors will make money on bankruptcy

#82

Post by paulpauper »

Nursie wrote: post #81
paulpauper wrote: post #74

Earlier quoted context omitted.

Yeah, 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.

> 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.

as early as Jan 2023, before bitcoin had appreciated, $5 billion had already been recovered

https://www.forbes.com/sites/dereksaul/2023/01/11/bankrupt-f...

Anthropic was another $1 billion

Re: FTX creditors will make money on bankruptcy

#83

Post by Nursie »

teractiveodular wrote: post #4
tiffanyh wrote: post #3

Dumb question: why are creditors getting paid more than they are owed?

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%.

FTX didn’t have their BTC though. That’s part of the problem.

Re: FTX creditors will make money on bankruptcy

#84

Post by ForHackernews »

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.

Maybe in a real bank you do. Not in cryptoland. "Not your keys, not your coins" as they are so fond of saying.

Re: FTX creditors will make money on bankruptcy

#85

Post by Nursie »

paulpauper wrote: post #82
Nursie wrote: post #81

Earlier quoted context omitted.

> 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.

as early as Jan 2023, before bitcoin had appreciated, $5 billion had already been recovered https://www.forbes.com/sites/dereksaul/2023/01/11/bankrupt-f... Anthropic was another $1 billion

Even that article says the assets there are not enough to come close to liabilities.

FTX was insolvent at that time.

Re: FTX creditors will make money on bankruptcy

#86

Post by JumpCrisscross »

paulpauper wrote: post #80
JumpCrisscross wrote: post #75

Earlier quoted context omitted.

> he was technically not lying about FTX having the money They didn't have the money. These gains are due to appreciation.

as early as Jan 2023, before bitcoin had appreciated, $5 billion had already been recovered https://www.forbes.com/sites/dereksaul/2023/01/11/bankrupt-f... Anthropic was another $1 billion

$6bn out of twelve is very much not having the money.

Re: FTX creditors will make money on bankruptcy

#87

Post by norswap »

KoolKat23 wrote: post #58
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.

I struggle to see the issue with the headline, this is how bankruptcy works, it's how they would usually report in relation to creditors.

I don't know how bankruptcy documents work, but this is not a filling, it's a general-audience article.

The truth is if you had one Bitcoin in FTX, that was worth 20k. You might have bought for more or less than that. Now it's worth 60k. You didn't get the 20k back immediately (in which case you could have repurchased the Bitcoin immediately and not lose anything).

- If you bought Bitcoin above 20k, you lost money, whereas you wouldn't have otherwise. - If you would have kept your Bitcoin, you would have 60k now. You didn't get a choice in the matter.

The problem if of course "what is money" — the thing you owned was a Bitcoin, and now you're getting back its value from back then in dollar terms. This value changed meanwhile, shocking! But quite clearly, most people would have had more money now if that hadn't happened.

So while it's possible that some people would have sold lower than 24k (it didn't stay that low very long), most people wouldn't have, and so they lost money, in the commonly accepted undertanding.

Imagine the government seized your house 10 years ago, then paid you back today its price from 10 years ago +20%. Did you not lose money?

Re: FTX creditors will make money on bankruptcy

#88

Post by paulpauper »

JumpCrisscross wrote: post #86
paulpauper wrote: post #80

Earlier quoted context omitted.

as early as Jan 2023, before bitcoin had appreciated, $5 billion had already been recovered https://www.forbes.com/sites/dereksaul/2023/01/11/bankrupt-f... Anthropic was another $1 billion

$6bn out of twelve is very much not having the money.

a far cry from zero, and the CZ tweets triggered a run. How many other exchanges have enough assets on hand to cover every depositor at once instantaneously? Even mainstream banks cannot cover everyone (this is what a bank run is and is why central banks exist to provide a backstop in such an event).

Re: FTX creditors will make money on bankruptcy

#89

Post by JumpCrisscross »

paulpauper wrote: post #88
JumpCrisscross wrote: post #86

Earlier quoted context omitted.

$6bn out of twelve is very much not having the money.

a far cry from zero, and the CZ tweets triggered a run. How many other exchanges have enough assets on hand to cover every depositor at once instantaneously? Even mainstream banks cannot cover everyone (this is what a bank run is and is why central banks exist to provide a backstop in such an event).

> far cry from zero

Straw man. You said SBF "was technically not lying about FTX having the money." He was. If you ask me to hang on to your $12 and I spend half of it, I don't have the money.

> How many other exchanges have enough assets on hand to cover every depositor at once instantaneously?

All of them. Exchanges and clearinghouses in a proper financial system are fully collateralised.

> this is what a bank run is and is why central banks exist

Banks are leveraged. FTX was not supposed to be levered. It should have been able to survive a "run," because it wasn't supposed to have asset-liability mismatches.

Re: FTX creditors will make money on bankruptcy

#90

Post by norswap »

graeme wrote: post #68
kwar13 wrote: post #65

Earlier quoted context omitted.

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 ba…

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

This is at best only partially true, you own a claim on the underlying asset.

This is not a matter of regulation, it's a matter of your contractual agreement with FTX.

I don't know how more regulated brokers work, but I also doubt you own the asset outright, you also probably own a claim, which is why if the broker goes bankrupt because of fraud you might not recover it.

Regulation wouldn't have changed anything here: as FTX simply broke the law, which they could have done regardless of regulation & reporting requirements (e.g. WorldCom, Enron, ...).

What they did was not legal, even wrt to what regulation they were subjected to.

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