Crypto and Web3 have unrealized potential, says Joe Lonsdale, but a lack of regulation over the years has led to speculative bubbles and Ponzi schemes.
After the collapse of FTX, the once $32 billion cryptocurrency exchange, much attention focused on the now bankrupt company’s most prominent and celebrity investors.
But with over a million creditors, many young, illiterate investors will be left clutching the bag.
A bankruptcy court hearing scheduled for Friday at 10am EST could shed more light on the full spectrum of those who lost money due to the FTX crash. The hearing will consider a motion to release a full list of FTX creditors, including their names and email addresses.
Sheila Beer, former president of the Federal Deposit Insurance Corporation (FDIC), said recently Fox Business The real tragedy of FTX’s collapse is that “it’s potentially a million, proportionally, much smaller investors who are really going to be hurt.”
The FTX scam will make ‘Enron look like peanuts’: Former United States Attorney
The FTX logo is seen at the entrance to the FTX Arena in Miami on November 12, 2022. (Reuters/Marco Bello/file photo/Reuters Images)
Bair noted that FTX and the crypto industry in general have It is marketed heavily to youth He said it “sad” her that many who had bought into the company’s appeal were unlikely to get their investment back.
It suggested that to prevent a similar future crash, cryptocurrency exchanges should be required to show evidence of reserves and that some oversight measures should be implemented.
The current CEO of FTX, John J. Ray III, a corporate restructuring expert who handled the bankruptcy of energy trader Enron, He testified before the House Financial Services Committee On Tuesday he noted that clients who put their money into FTX and its affiliates should not hope for a full recovery of their investment.
“We’re not going to get all of those assets back,” Ray bluntly said.
Samuel Bankman Fried leaves court in Nassau, Bahamas, Tuesday. (Mega Four Fox News Digital / Fox News)
In initial filings during the early stages of the bankruptcy proceedings, FTX indicated that it owed it The 50 largest unsecured creditors More than 3 billion dollars. In that time, the company was able to identify 100,000 creditors it was aware of, most of whom were FTX customers.
However, since the bankruptcy of FTX and its 130-plus affiliated entities could also affect former customers and others, the total number of creditors could eventually rise to over a million.
Where did the money in FTX CRYPTO collapse?
Sam Bankman-Fried, founder and former CEO of FTX Cryptocurrency Derivatives Exchange, speaks during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York August 17, 2022. (Jenna Moon/Bloomberg via Getty Images/Getty Images)
FTX founder and former CEO Sam Bankman-Fried was Arrested by authorities in the Bahamas On Monday it is expected to be delivered later.
Federal prosecutors announced Tuesday that Bankman Fried was indicted on eight counts In the United States, the total penalty is 115 years in prison. The charges against him include wire fraud against customers, as well as a related conspiracy charge; wire fraud against lenders, in addition to a conspiracy charge; Conspiracy to commit commodity fraud, securities fraud, money laundering, and to violate campaign finance laws.
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The Bankman Fried case, to which comparisons have been drawn, was said by US Attorney for the Southern District of New York Damian Williams Bernie Madoff’s Ponzi Scheme and the Enron ScandalIt would be considered “one of the largest frauds in American history.”
Brick Dumas of Fox Business contributed to this story.
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