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FTX Customer Says Hedge Fund Cheated Him on Bankruptcy Gains

Livemint

Livemint · 10m ago

FTX Customer Says Hedge Fund Cheated Him on Bankruptcy Gains

- An FTX customer has sued hedge fund Olympus Peak, alleging that the fund underpaid him for his claim in the bankrupt cryptocurrency exchange. - The customer, Nikolas Gierczyk, sold his $1.59 million claim to Olympus Peak at a 42% discount. - Gierczyk claims that he negotiated an explicit right to additional recovery in his agreement with Olympus Peak, but the fund refused to honor it. - FTX, the bankrupt cryptocurrency exchange, has amassed billions of dollars more than it needed to cover customer losses due to a bullish crypto market. - Hedge funds often buy distressed assets at a discount, offering claimants a quick payout while holding out for a better recovery in the bankruptcy process.

Related News

Sam Bankman-Fried testifies he believed FTX was 'fine' until just before collapse

Economic Times

Economic Times · 1y ago

Sam Bankman-Fried testifies he believed FTX was 'fine' until just before collapse

Sam Bankman-Fried, the founder of FTX, testified in his fraud trial that he believed the cryptocurrency exchange was solvent when he tweeted "FTX is fine" days before it declared bankruptcy in November 2022. He defended himself against allegations that he misled the public about FTX's health. Bankman-Fried recounted the events leading up to FTX's collapse, including heavy losses sustained by his hedge fund Alameda Research. He claimed that Alameda's debts to FTX affected his perception of the exchange's solvency. He faces charges of fraud and conspiracy, with prosecutors accusing him of misappropriating customer funds.

Sam Bankman-Fried demanded special privileges for Alameda Research: ex-colleague Gary Wang

Economic Times

Economic Times · 1y ago

Sam Bankman-Fried demanded special privileges for Alameda Research: ex-colleague Gary Wang

Gary Wang, a former college roommate and ex-colleague of Sam Bankman-Fried, founder of the FTX cryptocurrency exchange, testified in court during Bankman-Fried's fraud trial. Wang claimed that Bankman-Fried instructed him to grant special trading privileges to the hedge fund Alameda Research, which included a $65 billion line of credit, far larger than what other users could borrow. Alameda had withdrawn $8 billion from FTX before the exchange's bankruptcy in November 2022. Bankman-Fried faces allegations of stealing billions from FTX customer deposits to cover losses at Alameda and other uses, which he denies. Wang is one of three cooperating witnesses in the trial.

SBF is going to prison, but the fight over money at FTX drags on

Livemint

Livemint · 1y ago

SBF is going to prison, but the fight over money at FTX drags on

Several former FTX customers are still grappling with the aftermath of the cryptocurrency exchange's collapse. While the recent crypto rally has allowed FTX's bankruptcy estate to offer full settlements to some creditors, many customers are still uncertain when or if they'll receive their money back. Some have sold their claims to hedge funds at a fraction of their value, while others are trying to recover their funds through bankruptcy trustees. The saga has caused frustration and anger among the affected customers, with some feeling that they've missed out on significant gains due to the recent crypto market rally.

Sam Bankman-Fried has 'regret' for not probing $8 billion debt to FTX

Economic Times

Economic Times · 1y ago

Sam Bankman-Fried has 'regret' for not probing $8 billion debt to FTX

Sam Bankman-Fried, the founder of FTX, concluded his defense in his fraud trial, expressing "regret" for not examining the $8 billion his hedge fund borrowed from the cryptocurrency exchange before its collapse in November. Bankman-Fried claimed he thought it was "permissible" for his Alameda Research hedge fund to use customer deposits in a bank account it controlled, per FTX's instructions. He faces two counts of fraud and five counts of conspiracy. Prosecutors allege he looted customer funds to support Alameda, made speculative investments, and donated to U.S. political campaigns.

Crypto exchange FTX ordered to pay $12.7 billion to customers, US CFTC says

Economic Times

Economic Times · 1y ago

Crypto exchange FTX ordered to pay $12.7 billion to customers, US CFTC says

U.S. cryptocurrency exchange FTX has been ordered by a court to pay $12.7 billion in relief to customers, following its collapse in late 2022. The Commodity Futures Trading Commission (CFTC) stated that FTX had misled customers about its safety and misappropriated their deposits. As part of a settlement with the CFTC, FTX will repay customers in a bankruptcy liquidation. The repayment order includes $8.7 billion for restitution and $4 billion for disgorgement. FTX founder Sam Bankman-Fried, who was sentenced to 25 years in prison for stealing $8 billion, has appealed the conviction. Votes on FTX's bankruptcy proposal are due on August 16.

FTX Says It Expects to Repay Customers in Full. Some Are Suing for More

Wired · 1y ago

FTX Says It Expects to Repay Customers in Full. Some Are Suing for More

A group of former customers of bankrupt crypto exchange FTX are opposing a plan that aims to return their lost funds. The customers argue that the plan does not reflect the actual value of their assets, especially considering the rise in cryptocurrency prices since the exchange's bankruptcy. FTX collapsed in 2022, leaving billions of dollars missing. While FTX expects to have sufficient funds to pay all customer and creditor claims in full, some customers are unhappy with the dollarization of their claims and the outdated valuation. They have filed a lawsuit seeking fairer compensation.

SBF's prison sentence marks the end of the crypto grift era — so what's next?

TechCrunch · 1y ago

SBF's prison sentence marks the end of the crypto grift era — so what's next?

Federal judge sentenced former FTX CEO Sam Bankman-Fried to 25 years in prison for wire fraud and money laundering. Bankman-Fried and his partners used their cryptocurrency exchange, FTX, to secretly divert customer deposits to their hedge fund, Alameda Research. The scheme was exposed through leaks and investigative work. This sentencing marks a shift towards a more cautious phase in the crypto industry, where developers are urged to build useful applications on blockchain technology. However, the value of most blockchain projects still revolves around speculation, and there hasn't been a successful blockchain-based startup yet. Bitcoin remains as the most stable and widely adopted cryptocurrency due to its tangible backing of energy consumption.

Sam Bankman-Fried stole customer funds from the beginning of FTX, exchange's cofounder tells jury

Economic Times

Economic Times · 1y ago

Sam Bankman-Fried stole customer funds from the beginning of FTX, exchange's cofounder tells jury

Gary Wang, co-founder of FTX cryptocurrency exchange, testified in a New York trial that Sam Bankman-Fried, the CEO of FTX, authorized the illegal use of FTX customers' funds and assets to cover losses at an affiliated hedge fund, Alameda Research. Bankman-Fried allegedly ordered code changes giving Alameda special privileges, including a $65 billion line of credit. Prosecutors claim Bankman-Fried stole billions of dollars to fund a lavish lifestyle. Wang, part of FTX's "inner circle," pleaded guilty to fraud charges and is testifying in exchange for leniency in his case. The trial continues.

FTX expects US to reduce bankruptcy claim to $3 billion to $5 billion

Economic Times

Economic Times · 1y ago

FTX expects US to reduce bankruptcy claim to $3 billion to $5 billion

Crypto exchange FTX expects to negotiate down U.S. government claims in its bankruptcy to $3-5 billion, leaving no funds for shareholders. Founder Sam Bankman-Fried's claims that FTX's collapse caused no harm were deemed false. FTX estimates it will have $13.7 billion in assets to pay its $31.4 billion in legitimate claims, including customer claims and those from the U.S. Commodity Futures Trading Commission and the IRS. However, FTX's proposed repayment plan faces obstacles, including negotiations over the $17 billion government claims. Shareholders have little chance of recovering any funds from the bankruptcy.

Hedge fund manager faces arrest over $533 million taken from Byju's

Economic Times

Economic Times · 1y ago

Hedge fund manager faces arrest over $533 million taken from Byju's

A U.S. bankruptcy judge has ordered the arrest of William Cameron Morton, a hedge fund manager accused of helping Indian edtech startup Byju's hide $533 million from its lenders. Byju's Alpha, a subsidiary controlled by the lenders, filed for bankruptcy earlier this year after defaulting on $1.2 billion in debt. The lenders discovered that Byju's had sent the funds to Morton's hedge fund, Camshaft Capital. Morton failed to appear in court and provide evidence of hospitalization abroad, resulting in a warrant for his arrest and a $10,000 per day fine until compliance is achieved. Byju's lenders have sued Morton and Camshaft for the missing funds.

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