FTX Lawyer: Potential for 1 Million Creditors
SoftBank Records Full Loss of 130 Billion KRW Investment in FTX
Conditional Investment Refund Methods for NFT Purchases Also Discussed
[Asia Economy Reporter Seunggon Han] A survey revealed that among users of the bankrupt cryptocurrency exchange FTX, the largest proportion are South Koreans. There are concerns that domestic investors may suffer significant losses. Although FTX stated that investment recovery is possible in the Bahamas, where its headquarters is located, this requires purchasing non-fungible tokens (NFTs), making it a conditional form of investment recovery, which is expected to face opposition from investors. Some have pointed out that investment recovery may be practically impossible. It is also known that major investors have currently suffered substantial losses.
According to the website analytics firm 'Earthweb,' as of August, the largest share of users visiting the FTX exchange were from South Korea (6.21%). Singapore (5.26%), Germany (4.2%), Russia (3.66%), and Japan (3.56%) followed.
Another website analytics firm, 'Similarweb,' reported that from August to October, South Korea (6.01%) ranked second in traffic to the FTX site. Japan (7.01%) was the highest, followed by Germany (5.38%) and Singapore (4.95%). However, Americans used FTX.US instead of FTX, so they were not included in the 'Earthweb' and 'Similarweb' surveys.
Number of Creditors Disclosed by FTX When Filing for Bankruptcy Protection Was 100,000
The problem lies in the recovery of investments by individual investors. On the 14th (local time), major foreign media reported, based on documents submitted by FTX lawyers to the court, that the number of creditors could reach one million. This is ten times the number of creditors (100,000) disclosed by FTX when it filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in Delaware on the 11th. Most of these are unsecured subordinated creditors who may not receive any money.
Relatedly, the Wall Street Journal (WSJ) recently reported that FTX founder Sam Bankman-Fried is attempting to raise new funds. A source cited by WSJ said, "Despite the bankruptcy filing, he believes he can raise enough money to save the company," and explained, "He sought investors last weekend to cover a shortfall of up to $8 billion (approximately 10.5 trillion KRW) with remaining employees."
However, investment recovery remains uncertain. Bloomberg reported, "Even major investor SoftBank has written off its entire $100 million (approximately 133 billion KRW) investment in FTX." The situation is similar for individual investors.
However, it is not entirely impossible. On the 11th, FTX announced via Twitter that "withdrawals are currently possible in the Bahamas according to the regulations and laws of the regulatory authorities where the headquarters is located." However, investment recovery is known to be conditional. On the 12th, CNBC reported, "Some FTX users appear to be withdrawing funds with the help of Bahamian residents," and "a transaction pattern was discovered where Bahamian residents withdraw funds from FTX and, in return, investors purchase the Bahamian residents' NFTs at high prices."
Meanwhile, WSJ reported on the 14th that the founder of FTX has been named in the U.S. prosecutors' investigation. According to the report, the Manhattan District Attorney's Office in New York has launched an investigation into FTX, Alameda Research?the epicenter of the crisis?and related parties including Sam Bankman-Fried. If any illegal activities occurred involving U.S. citizens' funds deposited by users in FTX or funds moved through financial institutions to repay debts, U.S. investigative agencies can investigate.
New York Prosecutors Launch Investigation into FTX Founder Sam Bankman-Fried and Others
Additionally, allegations have arisen that FTX supported Alameda with more than half of the $16 billion (approximately 21 trillion KRW) in customer funds, prompting investigations by the U.S. Securities and Exchange Commission (SEC) and the Department of Justice. According to 'Cointelegraph,' former FTX CEO Sam Bankman-Fried, FTX co-founder Gary Wang, and FTX Engineering Director Nishad Singh have been confirmed to be in the Bahamas and are reportedly under local authorities' supervision.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
