FTX customers have been in dire straits ever since the collapse of the exchange. Post the bankruptcy filing, customers lost hope of recovering their funds. However now, there might be a glimmer of hope.
The current CEO of the exchange, John J. Ray III, told a panel of US lawmakers that he was optimistic that the company will be able to recover and return funds to FTX.US customers sooner than those on FTX.com. The former platform is for US-based customers. The latter, on the other hand, caters to international clients.
US users aren’t supposed to trade on the FTX.com platform, but Ray revealed that a small number of people [a couple hundred] had accounts on the platform.
Affirming to the House Financial Services Committee that the US arm will suffer less, the executive said,
“There’s a general truth to the statement that the US exchange will suffer less.”
All Losses Can’t Be Recovered
John J. Ray III, as such, is also responsible for restructuring the collapsed exchange. He denied that the US entity was completely solvent and that customer accounts could be unfrozen at any time.
The executive pointed out that was “premature” to say that US customers will receive all the assets they had on the platform, prior to the bankruptcy filing last month. US customers, on their part, had less exposure to losses. More so, because FTX executives withdrew more funds from FTX.com, rather than FTX.US to lend to Alameda Research.
Ray said there were about 2.7 million user accounts on the American platform and 7.6 million on the international platform. He, however, noted that the actual number of individuals involved was likely lower because some users had multiple accounts. Without giving a timeline for when customers will get back access to their accounts, Ray hinted that the process would take months.
Losses will first be assigned to user accounts as a part of the next step. Further elaborating on the process, Ray said,
“It’s a mining exercise at this point. At the end of the day, we’re not going to be able to recover all the losses here. Money was spent that we’ll never get back.”
The Securities and Exchange Commission has charged former FTX chief Sam-Bankman Fried with defrauding investors. According to the SEC, the FTX founder tried to conceal a number of things from the exchange’s investors. This comprised the unrevealed diversion of FTX customers’ funds to Alameda Research LLC.
This was followed by the undisclosed special treatment afforded to Alameda on the FTX platform. Undisclosed risk pertaining to FTX’s exposure to Alameda’s holdings of “overvalued, illiquid assets” was also part of the list.
Read More: SEC charges former FTX chief Sam-Bankman Fried for Defrauding Investors