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An estimated billions of dollars belonging to FTX customers and investors is presently held up in a bankruptcy case. Despite having lost millions, some people interviewed by CNBC still have confidence in the crypto sector and are using other exits for their funds so as to reinvest in crypto. One customer revealed, “I am in a huge financial mess now and I may have to declare bankruptcy.”, even though the collapse cost him a chunk of his portfolio.
FTX's multi-billion-dollar cryptocurrency implosion hasn't diminished everyone's confidence in the sector. In a fresh documentary airing on Monday, customers, insiders and financiers of the platform have told CNBC they remain hopeful in the industry and intend to keep placing their money there. App programmer, businessperson and angel financier, Evan Luthra, informed CNBC he had lost $2 million dollars during FTX's closure. When the firm filed for bankruptcy in late 2022, Luthra had become aware he wouldn't "have access to any of this money for the next few years." Despite this setback, he continues to attend cryptocurrency events.
Luthra stated that the error was not made by Bitcoin or cryptocurrency in general, but instead was a mistake with a particular exchange. Despite his losses on FTX, Luthra still believes that the cryptocurrency will be worth over $100,000. He commented that "success is made in the trenches, not when everybody's already celebrating." FTX's rapid downfall caused investigators to find an estimated $8.9 billion dollars of customer assets missing, leading to the criminal charges against its former CEO. Bankman-Fried has denied all charges, with jury selection commencing in Manhattan on Tuesday.
At an April 2022 bankruptcy proceeding, FTX's lawyer reported that $7.3 billion in cash and easily convertible digital currency had been retrieved from the exchange. None of the CNBC-questioned customers have received a cent back according to them. Jake Thacker, an FTX customer from Portland, Oregon, revealed to CNBC that he had lost considerable sums of money. After losing his job in Tech, he told the outlet "I'm in a deep hole. I'm probably going to have to declare bankruptcy."
Thacker advised CNBC that people should still invest in crypto, but cautioned them, "Here's what I learned, don't make the same mistakes I did." Bhagamshi Kannegundla was drawn to FTX after seeing an advert featuring Larry David during the Super Bowl. He thought, "'Oh my goodness, there's all these big name people utilizing FTX. So I was like, OK, hey, I think I'll be safe using this.'" Unfortunately, Kannegundla's crypto portfolio was decimated when FTX collapsed, the losses amounting to around $174,000 - 60% of his total investments.
Kannegundla was anxious about the probability of getting anything back from the crypto market bankruptcies, and chose to look for a company that could buy his bankruptcy claim of $174,000 for a mere 11% of its worth, instead of waiting for recoveries to be distributed to FTX customers. While the buyer will receive any surplus funds from the FTX process in the future, Kannegundla views his decision as an investment in the technology, similar to the investor who bought Amazon stock. Though Sunil Kavuri, another FTX customer, had a background in traditional finance, he transferred his digital assets from Binance to FTX because it was deemed safe and institutionally backed exchange by VC firms Sequoia and Paradigm. Kannegundla acknowledges that people may deem his strategy to be "crazy," but he stands by it.
Kavuri told CNBC that he has not purchased any crypto since the downfall of FTX as he desired a respite from going through a hefty loss. For the past 10 months, he has devoted most of his time to advocating "for the rights of all FTX users who were affected by the FTX insolvency." He added that "This has not dissuaded me from believing in the essential asset itself. I believe that cryptocurrencies in general shall stay here."
Despite the wild events of 2022 in the cryptosphere, many still have faith in the industry. Brett Harrison, the ex-President of the U.S. division of FTX, was taken aback by the company's failure. Yet, he remains staunchly committed to digital currencies. In an interview with CNBC, he emphasized that he saw nothing out of the ordinary prior to his exit from FTX a couple of months ago.
Harrison voiced his intention to create Architect Financial Technologies, an enterprise that will specialize in trading digital resources and other tokenized products, in addition to other asset classes. Anthony Scaramucci, founder of Skybridge Capital, expressed regret for not investing in bitcoin until October 2020. Following that, he devoted his company to digital assets.
Scaramucci informed CNBC that he had been forming a tight bond with Bankman-Fried; subsequently, he was saddened when the Firm dropped following his $10 million investment in FTT tokens. He went on to point out that he still feels there is a strong positive argument for Web 3, a term that describes the upcoming distributed internet and the technologies related to crypto. He concluded by stating, “If you’re going to go through a phase of scams, deception and excessive borrowing, you have to wait till it ends.”
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