What happened to FTX?
Crypto exchange FTX, which was recently valued at $32 billion, was the third largest exchange in the world before it went bankrupt and filed for Chapter 11 bankruptcy. In short, FTX gambled and its users’ funds were lost, and on November 11, 2022, FTX withdrew funds for all users.
However, there is a confirmed flow on the block and reports of users looking for jobs to withdraw funds from FTX. Let’s take a look at some of these and see if they are still viable.
How TRON works
On November 10, FTX announced a Tron Token Credit facility to allow users to withdraw TRON-based tokens they hold on the exchange:
“We announce that Tron and Tron have reached an agreement to create an exclusive feature that will allow holders of TRX, BTT, JST, SUN and HT to exchange assets from FTX 1:1 to external wallets.”
This led to an increase in the price of TRON tokens on FTX, and TRX settled at around $0.30, down from $0.06 to $2.50 at the time of writing.
TRX tokens on other exchanges (e.g. Binance) are sold at $0.05, which means that even if you can exchange your money on FTX for TRX and withdraw from the exchange, you will lose 83% of the value of your money.
At the end of the day, losing 83% is better than losing 100%, so this could be a viable option if it really works out. Given that TRX has been broken from highs and continues to decline, it is possible that this withdrawal method is no longer working.
Having said that, only $13,000,000 worth of property has been made available with plans to add more weekly listings at 2:00. It is likely that the initial $13,000,000 has been used and more TRON assets will be available in the coming days. Neither FTX nor TRON founder Justin Sun has commented further at the time of writing, so we’re not holding our breath here.
Bahamas NFT Loophole
Zane Tackett, former head of institutional sales at FTX, recently announced that Bahamians have the legal right to withdraw funds:
1) We have started facilitating the withdrawal of Bahamian funds in accordance with the regulatory and regulatory requirements of our HQ in the Bahamas. As such, you can see some of the backlogs processed by FTX recently when we ran the regulator. – @tackettzane
Most FTX users are not in the Bahamas, so they cannot take advantage of this situation.
However, there have been reports of users in the Bahamas buying obscure NFTs, selling them to users on the FTX NFT market at inflated prices, then withdrawing the funds locally and sending them to users (minus a percentage). This is a very risky strategy because it involves signing a contract with someone in a distant jurisdiction and believing that they will follow through on the contract if they decide to leave the money.
Are you healthy?
All our plans mentioned above are useless if you cannot follow them. At the time of writing, many FTX users are reporting that they cannot access the site or app and are waiting for an ETA when they can access it. Additionally, the Bahamas Securities and Exchange Commission froze FTX’s assets and suspended its registration.
It is possible that FTX will not have sufficient funds to pay all of its investors, even without reducing other third party obligations. FTX’s bankruptcy filing estimates that it has $10 billion to $50 billion in assets and $10 billion to $50 billion in liabilities, which is a wide range, but that’s only an option for those filing for bankruptcy.
According to Financial Times, FTX has $900 million in liquid assets (assets that can be easily sold at cost) and $9 billion in liabilities. That compares to numbers posted on Twitter by former FTX executive Tane Zackett. It also includes an estimated additional $2 billion in “less liquid” assets (which could likely be phased in) and $3.2 billion in assets that would be sold at a substantial discount in a similar bankruptcy/liquidation scenario.
Is the deposit payable upon cancellation?
When a company goes out of business, all of its assets are sold to pay off its debts. Usually, companies go into liquidation because they don’t have enough money, which means that some debts will be paid and most will get nothing. FTX users will be called “betters” in this case and are usually at the front of the queue, but if there is not enough money to pay everyone back, the user will at best receive a portion of their funds as “pennies on the dollar”.
There is no guarantee that this will be resolved quickly either. The previous Bitcoin exchange MtGox was hacked in 2014 and users had to be paid in January 2023, almost nine years after the incident.
Your best bet is to (screen document) the assets in your current FTX account.