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Dude who invested in troubled crypto exchange FTX goes from being millionaire on paper to having almost nothing
Dude who invested in troubled crypto exchange FTX goes from being millionaire on paper to having almost nothing
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Kim Huat weighs in on cryptocurrency investment and FTX:
https://www.coingecko.com/research/publications/countries-impacted-ftx-collapse
26-year-old investor files for bankruptcy as FTX meltdown puts focus on Singapore's digital asset stance
Jacob* was immediately intrigued with cryptocurrencies and digital assets when he first heard about them as a teen, but only found time to learn how to trade during lockdown in 2020.
He quickly built up a decent sum, mostly using Binance – the world’s largest cryptocurrency exchange. But government regulations introduced last year limited the services Binance could offer Singaporeans, so the 26-year-old decided to shift his money to another exchange, FTX, a platform with around one million users.
On Nov 8, he noticed that something was wrong as major institutions began unloading their holdings of FTT – native cryptocurrency tokens used on FTX.
But management trainee Jacob was unable to withdraw all his $50,000 before FTX collapsed and filed for bankruptcy.
“I happened to have my money in the wrong place at the wrong time,” he said. Imagine having S$50,000 in [a bank] and then suddenly you don’t any more, not because you bought the wrong stocks, but simply because you left your money in there.”
Last week, in mere hours, he lost almost his entire savings when FTX saw a huge sell-off triggered by a tweet by rival Binance’s CEO Zhao Changpeng, announcing the firm had decided to dump all its FTT holdings.
The tweet sparked an investor exodus from both the token and the exchange. An FTT worth US$78 in September 2021 fell to around US$24 before the tweet, and less than US$2 (S$3) this week.
Jacob – who spoke to This Week in Asia on condition of anonymity – as well other Singaporean youth interviewed by media outlets like Tech in Asia said they thought FTX was reliable because it had the investment backing of the likes of Singaporean state investor Temasek, Sequoia Capital and Japan’s Softbank .
These investors – among the most respected in the world – had put money on FTX.
Singapore’s Temasek, majority owner of the nation’s top corporate brands such as Singapore Airlines and Singtel, on Thursday said it was writing down its US$275 million investment in FTX , reasoning it had “misplaced” its belief in founder Sam Bankman-Fried.
The investment amounted to 0.09 per cent of its net portfolio of $403 billion as of March 31.
In local crypto circles, some have questioned if local authorities could have done more to insulate Singapore investors from FTX’s collapse.
Officials have pointed out that the government has long warned about the risks inherent in cryptocurrency investment. “We are open to digital innovation and digital asset innovation, but we are not open to crypto speculation at all,” Deputy Prime Minister Lawrence Wong said at the Bloomberg New Economy Forum on Thursday.
As far back as 2017, the central bank, the Monetary Authority of Singapore (MAS), has consistently warned that cryptocurrencies are not suitable investments for the retail public.
In September 2021, MAS placed Binance on its Investor Alert List (IAL) to warn investors the firm did not possess a local license. The IAL warns consumers that entities on it are not regulated or licensed to provide payment services in Singapore. The MAS also blocked Binance from providing payment services, leading the company to terminate its Singapore operations.
Reports have said numerous investors, like Jacob, switched to FTX at this point, thinking it was safe because authorities had not placed the platform in the same category as Binance.
MAS sought to set the record straight this week, noting that Binance was never banned from operating in the country. It also said it had no cause to add FTX to its IAL, adding that it was not possible to prevent Singapore users from directly accessing overseas service providers.
While entities are included in the IAL if they “may be wrongly perceived as being regulated by MAS”, the central bank said it was not meaningful to include all unlicensed entities.
Jacob told This Week in Asia he understood that “investments carry risk and it’s honestly not up to the authorities to bear those risks when things go awry.”
But, he added, “what investors look out for, however, are signals that the government and its related corporations give out. Effectively cutting off Singaporeans’ access to Binance and investing a large chunk in FTX via Temasek is one big signal”.
Experts who spoke to This Week In Asia said the FTX meltdown was likely to bring into focus the need for governments – in Singapore and elsewhere – to step up plans to regulate the cryptocurrency space. MAS in October unveiled a proposal to reduce risk to consumers in this regard.
Shaun Leong, a partner in the international arbitration and litigation team at law firm Withers KhattarWong, said it was “reasonable” that some investors considered that Binance was banned in Singapore, given authorities ordered it to stop providing payment services to Singapore residents since it did not have a licence to solicit customers.
Woo Jun Jie, senior research fellow at the Institute of Policy Studies at the National University of Singapore, said: “Binance was placed on the IAL as it had been wrongfully perceived to be regulated by MAS and hence permitted to solicit customers.
“The confusion came about because there is no way to stop a crypto platform from onboarding investors from anywhere in the world , and it would hence not be meaningful to have a list of platforms that are ‘not regulated’.”
Nizam Ismail, founder of Singapore-based compliance consultancy Ethikom Consultancy, said complaints from investors that they had no option but to invest with FTX were inaccurate, and said MAS issued warnings on dealing with unlicensed exchanges.
“Investors must conduct due diligence on whether the exchange is regulated in a reputable jurisdiction before deciding to trade on the platform,” he said.
Nevertheless, the saga highlighted the “obvious regulatory gaps” in the cryptocurrency market, Nizam said.
Ismail said the space remains “borderless” although regulations are “local”, making it challenging to make measures to police areas like consumer asset segregation or disclosures to consumers.
Woo, who researches cryptocurrency regulation, said authorities could consider introducing a “risk-based approach to categorising cryptocurrency platforms” to tell investors about the degree of risk when investing in a particular platform.
Is there any recourse for investors moving forward? Perhaps, although the process is likely to be long and arduous.
Mike Chiam, a partner at PDLegal LLC, a commercial law practice with expertise in cryptocurrency matters, said investors can review the background and circumstances of how they deposited their digital deposits on FTX and seek legal advice on the suspension of withdrawals.
With about US$650 million worth of cryptoassets mysteriously siphoned from FTX’s crypto wallets last week, it is also possible for affected investors to obtain worldwide freezing orders against the wallets of these unidentified hackers and end any further squandering, Leong said.
“I would not be too hopeful of getting anything back from this process given the substantial depletion of funds,” he added.
For now, investors like Jacob are left to rue what lies ahead after their heavy losses over the last two weeks.
“Last year, I was on track to making my first million by about 30 years old. Now, I’m resetting from zero,” said Jacob, who graduated from university in 2021. “I’m probably going to sell my car to save more money and accumulate all over again.”
* Not his real name
https://www.asiaone.com/money/not-open-crypto-speculation-all-ftx-meltdown-puts-focus-singapore-s-digital-asset-stance
SBF has thrown in the towel, FTX files for chapter 11 bankruptcy:
Everyone's turning spiritual after losing their wealth these days, how fucking convenient. 🤮
This one lagi worse....
Ontario Teachers' Pension Plan invested US$95M into failing crypto platform FTX
The Ontario Teachers' Pension Plan says it invested US$95 million into failing cryptocurrency exchange platform FTX Trading.
Rival exchange platform Binance pulled out of a deal to purchase FTX due to significant concerns, sending cryptocurrency prices falling, with Bitcoin sinking to a two-year low.
FTX is now being investigated for potential securities violations.
OTPP says it invested in FTX's international and U.S. arms through its Teachers' Venture Growth platform so it could gain small-scale exposure to this emerging area.
More at https://toronto.citynews.ca/2022/11/10/ontario-teachers-pension-plan-failing-crypto-platform-ftx/
Experts: FTX is a bigger scam than Madoff and Theranos
FTX Warns of Bankruptcy Without Rescue for $8 Billion Shortfall
SAM Bankman-Fried told FTX.com investors on Wednesday (Nov 9) that without a cash injection the company would need to file for bankruptcy, according to a person with direct knowledge of the matter.
Before Binance pulled an about-face and bailed on its takeover offer, Bankman-Fried informed investors his crypto exchange faced a shortfall of up to US$8 billion, said the person, who requested anonymity discussing private talks. FTX is attempting to raise rescue financing in the form of debt, equity, or a combination of the two, the person said.
An FTX representative declined to comment.
Bankman-Fried’s acknowledgement of his firm’s deep financial hole and limited options reflects the uncertain fate of FTX and its clients. It’s the latest twist in a stunning turn of events for the crypto industry’s onetime wunderkind, who was once worth US$26 billion and likened to John Pierpont Morgan.
Still, Bankman-Fried remained defiant during a hectic period of roughly 24 hours that included mounting speculation that Binance wouldn’t go through with the deal.
He repeatedly told investors during a conference call on Wednesday afternoon that it was simply not true that Changpeng Zhao was walking away from the takeover, the person said.
About an hour later, Binance said it was indeed backing out.
“Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance, the crypto exchange founded by Zhao, said in a statement.
In addition to its financial strains, FTX is drawing attention from US regulators. The Securities and Exchange Commission and the Commodity Futures Trading Commission are investigating whether the firm properly handled customer funds, as well as its relationship with other parts of Bankman-Fried’s crypto empire, including his trading house Alameda Research, Bloomberg News reported Wednesday.
Zhao said in a memo earlier on Wednesday that there was no “master plan” to take over FTX, and that “user confidence is severely shaken”.
The renewed concern about contagion risk is showing up in the plunging prices of digital assets.
Bitcoin fell below US$16,000, the lowest in two years, after Binance’s announcement.
Coinbase chief executive officer Brian Armstrong said on Tuesday in a Bloomberg TV interview that if the deal with Binance fell through, it would likely mean FTX customers would take losses.
“That’s a not a good thing for anybody,” he said.
https://www.bloomberg.com/news/articles/2022-11-09/ftx-investors-told-that-without-more-capital-bankruptcy-likely
Going from 1.5mil to zero warrior must really suck sia
That dumb speculative fuckhead can take comfort in the fact he isn't alone ;)
He shorted his Tesla stock and went all in on FTX? Sounds like some csb to moi.
Rise and fall of crypto exchange FTX
Cryptocurrency exchange FTX stood on the brink of failure on Thursday after a bailout from larger rival Binance collapsed. Chief executive Sam Bankman-Fried said he was exploring all options for his firm.
Here is a history of FTX since its foundation in 2019:
2019:
May - Former Wall Street trader Sam Bankman-Fried and ex-Google employee Gary Wang founded FTX, the owner and operator of FTX.COM cryptocurrency exchange.
2020:
August - FTX acquired mobile portfolio tracking application, Blockfolio for $150 million.
2021:
July - A $900 million funding round valued FTX at $18 billion.
September - FTX signed a sponsorship deal with Mercedes' Formula 1 team.
October - FTX raised capital at a valuation of $25 billion from investors including Singapore's Temasek and Tiger Global.
2022:
Jan. 27 - FTX's U.S. arm said it was valued at $8 billion after raising $400 million in its first funding round from investors including SoftBank (9984.T) and Temasek.
Jan. 31 - FTX raised $400 million from investors including SoftBank (9984.T) at a valuation of $32 billion.
June 4 - FTX signed a reportedly $135 million sponsorship deal for naming rights of the Miami Heat's home court.
July 1 - FTX signed a deal with an option to buy embattled crypto lender BlockFi for up to $240 million.
July 22 - FTX offered a partial bailout of bankrupt crypto lender Voyager Digital. Voyager called it a "low-ball bid".
July 29 - FTX said it won full approval to operate its exchange and clearing house in Dubai.
Aug. 19 - A U.S. bank regulator ordered crypto exchange FTX to halt "false and misleading" claims it had made about whether funds at the company are insured by the government.
Sept. 9 - FTX's venture capital fund said it would buy a 30% stake in SkyBridge Capital.
Nov. 2 - Crypto news website CoinDesk reported a leaked balance sheet that showed Alameda Research, Bankman-Fried's crypto trading firm, was heavily dependent on FTX's native token, FTT. Reuters was unable to verify the report.
Nov. 6 - Binance CEO Changpeng Zhao said his firm would liquidate its holdings of FTT due to unspecified "recent revelations".
Nov. 7 - Bankman-Fried said "FTX is fine. Assets are fine".
Nov. 8 - FTT collapses by 72% as clients swamp the exchange with withdrawal requests.
Nov. 9 - Binance decided against pursuing a nonbinding agreement to bail out FTX.
https://www.reuters.com/markets/currencies/rise-fall-crypto-exchange-ftx-2022-11-10
Fret not, Bedok Reservoir will always welcome you with open arms.