Australian FTX customers beg for money back from collapsed crypto exchange

The dramatic collapse of cryptocurrency exchange FTX has impacted almost 30,000 Aussies who are missing “very significant” sums of money, according to FTX Australia’s administrators, with concerns the funds in accounts had no protections.

KordaMentha, which has been appointed to oversee the administration of the global crypto exchange’s Aussie arm that employed five people, revealed it had received more than 280 emails from customers desperate for information about their accounts and money.

In documents filed in the Supreme Court of Victoria, customers told administrators they believed they had between $US40,000 ($A60,000) and $US1 million ($A1.5 million) invested in FTX, but their accounts showed zero balances when they logged in.

One customer spoke about how he was seeking his $A83,000 investment back, while another said they were “financially crippled”.

“I want my money back,” another said in an email.

The $US32 billion ($A47 billion) cryptocurrency exchange filed for chapter 11 bankruptcy less than two weeks ago, along with around 130 affiliated entities, including controversial trading firm Alameda Research, which is alleged to have played a central role in the implosion.

Disgraced FTX founder Sam Bankman-Fried told former employees he is “deeply sorry” about the implosion of his crypto exchange – but continued to point the finger at the company’s bankruptcy filing, insisting that he could have saved the platform if given enough time.

However, he faces criminal investigation in the Bahamas and a potential trip to the US for questioning over the disappearance of billions of dollars in customer funds.

In Australia, administrators have uncovered $A3 million in the accounts of FTX Australia, which allowed trading and a further $A39 million in the accounts of FTX Express that was used for local customers to purchase crypto in Aussie dollars.

But despite finding the $A42 million, the administrators face difficulties in knowing exactly who owns the money.

KordaMentha administrator Scott Langdon said in his affidavit that 29,234 individual customers were estimated to be impacted who “may have lost significant property”.

He said investigating a cryptocurrency exchange was presenting different challenges to a typical insolvency and requested the court to allow more time for the firm to hold a first creditor’s meeting.

“It is not unusual in cases such as this that some customers may have only a cursory understanding of the products and/or contracts they entered and, faced with losses outside of their control, react differently to trade creditors who might encounter losses in the usual course of their business,” he said.

“That is reflected in correspondence that we have received from customers where there has been an undertone of expectation that property or funds will be returned promptly, even though this is unlikely to be the case in this complex voluntary administration.”

Administrators have called for withdrawals to be frozen and for funds to be transferred into accounts controlled by KordaMentha.

“The administrators are continuing to conduct investigations into the affairs of the companies,” Langdon said.

“We have not yet been able to determine who has the beneficial entitlement to the funds that were held in the bank accounts. We are conscious of the need to preserve these funds until it can be determined as to who is beneficially entitled in circumstances where they may be subject to third-party claims.”

Mr Langdon will travel to New York to negotiate with the US administrators, while KordaMentha asked for patience as it starts the process of responding to thousands of inquiries from customers and creditors.

Meanwhile, FTX Australia’s financial services licence has been suspended by the Australian Securities and Investments Commission (ASIC).

The contagion from FTX collapse continues, with Brisbane-based crypto exchange Digital Surge freezing customer accounts because of its exposure.

The Australian Government has pledged to introduce legislation to safeguard customer’s money and regulate crypto exchanges with new laws expected to be introduced into parliament next year.

In the US, the new boss of the collapsed cryptocurrency exchange FTX John Ray made a scathing assessment of the company in a court filing, revealing it had suffered an “unprecedented and complete failure of corporate controls”.

Read related topics:Cryptocurrency

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *