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FTX creditors will make money on bankruptcy

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Re: FTX creditors will make money on bankruptcy

#101

Post by [deleted] »

FreeTrade wrote: post #36
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'm seeing a pattern of misleading headlines wrt this. My guess is that it is PR at work to convince public that FTX was a victimless crime - this is to help SBF avoid his full sentence.

[deleted]

Re: FTX creditors will make money on bankruptcy

#102

Post by [deleted] »

norswap wrote: post #87
KoolKat23 wrote: post #58

Earlier quoted context omitted.

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, w…

[deleted]

Re: FTX creditors will make money on bankruptcy

#103

Post by kelnos »

paulpauper wrote: post #94
Nursie wrote: post #85

Earlier quoted context omitted.

Even that article says the assets there are not enough to come close to liabilities. FTX was insolvent at that time.

It 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.

That's not how actual regulated exchanges work. No crypto "exchange" is actually an exchange, no matter what their marketing materials tell you.

In the US, a regulated exchange is required to hold your securities in segregated accounts, and cannot play fun games with them. Crypto "exchanges" are a joke.

> It did not help that CZ triggered a run on the assets at the worst time; otherwise it likely would have been fine

I find that unlikely. SBF was doing a bunch of risky things with FTX's assets. If he hadn't been found out, he likely would have done more and more risky things, and as Bitcoin's price recovered, he would have used that higher price to justify doing even more risky things.

I doubt there would have been many (if any) times when FTX could have paid out all its depositor obligations.

Re: FTX creditors will make money on bankruptcy

#104

Post by kelnos »

Scoundreller wrote: post #19
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

Miami-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…

> Those were some expensive words.

I find it weird that you condemn that decision based on perfect hindsight.

> 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.

Selling your claim reduces your exposure and eliminates the risk that you'd get even less after the bankruptcy process concludes. It also lets you book the loss now and move on. That's valuable to some people. Consider that people have different motivations and needs than you do.

Re: FTX creditors will make money on bankruptcy

#105

Post by kelnos »

Scoundreller wrote: post #50
metaphor wrote: post #47

Earlier quoted context omitted.

I fail to see how the decision was anything less than decisive prudence. Your cited article makes it abundantly clear that the provenance of said $17 million claim was a default clause entitling Miami-Dade County to three years worth of naming-rights fees. They sold that speculative claim for $5 million cash---effectively recovering that year's otherwise uncollectible receivables---then immediately turned around and…

The overarching question is: why should the County have thought the hedge funds are overpaying for the claim and to take the money and run? Usually when you have several suitors that purely have profit in mind, you're the mark. Doubly so when their cost of capital is higher than your own. > to allocate expensive legal resources in chase of speculative claims On a claim this big, the bankruptcy trustee takes care of t…

Overpaying or underpaying was irrelevant: the dollar amount they got was what mattered, and they were satisfied with that amount.

Re: FTX creditors will make money on bankruptcy

#106

Post by kelnos »

paulpauper wrote: post #69
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.

I 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.

Re: FTX creditors will make money on bankruptcy

#107

Post by kelnos »

paulpauper wrote: post #99
immibis wrote: post #92

Earlier quoted context omitted.

This wouldn't help because it would still not have enough Bitcoins to pay its customers.

there are hundreds of exchanges. how many of them are fully collateralized? doubt all of them are.

Then they're not exchanges. They're just places to put assets while the people who run them do whatever they want with those assets.

Re: FTX creditors will make money on bankruptcy

#108

Post by kelnos »

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.

No, SBF would have continued to take ridiculous risks with customer assets, and eventually it all still would have collapsed.

Don't look at this as validation of SBF's methods. This was luck. And there still isn't enough to make customers whole. For customers who deposited Bitcoin, for example, they're now still a lot worse off than if they'd held onto the coins themselves. Sure, they're getting back the cash value of their Bitcoin from several years ago (plus interest), but if they got the Bitcoins back, they'd have significantly more.

Re: FTX creditors will make money on bankruptcy

#109

Post by lolc »

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.

So could FTX, at the time of its bankruptcy, let everybody get the assets they had title to?

Because that was the issue wasn't it? They said they were holding stuff for customers, but didn't. The way I understood it the fraudsters only held a fraction of the Bitcoin they were supposed to hold, for example.

How would the scenario work where bankruptcy wasn't declared? They would have refused to provide assets to customers, the customers would have sued, and the fraud would have come out anyway.

Delaying discovery when you're underwater on your obligations means you're just piling on more crimes. Which is probably what lawyers explained to the chief fraudster. It gets harder and harder to claim an honest mistake.

Re: FTX creditors will make money on bankruptcy

#110

Post by sidewndr46 »

vlovich123 wrote: post #35
FireBeyond wrote: post #25

Earlier quoted context omitted.

That 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.)

That’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…

It's survivor bias. It seems unlikely, but we know FedEx to be a successful company to some reasonable level at this point in time. It stands to reason at some point in the past the company was very close to collapse. If it had collapsed we would never have heard about it.
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