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FTX victims are setting up a GoFundMe fundraiser to try to get their money back


People who say they lost money in the collapse of crypto exchange FTX are turning to strangers to cover their losses by setting up GoFundMe fundraising pages.

In it, a man said he lost his savings to surprise his girlfriend with her “dream” engagement ring. Now, “like many apps, my app is frozen and all the money is gone,” he said on his fundraising page, with a goal of raising $10,000.

On another page, a Florida man posted what appeared to be his young daughter’s photo with the caption: “Stolen Lifetime Savings.” He describes himself as an “ordinary person” with a job who lost “all” money when FTX exploded. “You can call me stupid or dumb, but I don’t know…It will take time to get my life savings back, but today I ask for any help I can,” he wrote on the site. GoFundMe.

FTX-related GoFundMe pages are popping up as FTX founder Sam Bankman-Fried says he’s trying to run a fundraising campaign of his own. He told a Vox reporter that he is trying to raise $8 billion in two weeks to save the company and return the money to investors and account holders. Bankman-Fried is said to have used FTX client funds to cover losses at its Alameda Research hedge fund, and at this point some FTX clients are trying to get others to cover their own losses.

‘I just saw an opportunity’

Those account holders include Joseph Pizzoferrato, 33, who set up GoFundMe to try to get the money back from his engagement ring. He started using FTX about a year and a half or two years ago, he told MarketWatch. He said: “Cryptocurrency seems complicated, but the FTX app is simple and easy to use, so it is a good place to start.

Pizzoferrato, who lives in Las Vegas and is a manager of a life insurance company, said he was initially skeptical about cryptocurrencies but took notice when Bitcoin
BTCUSD,
-0.07%

reached $60,000. “I just saw an opportunity and a lot of people are making money from day trading and that is the right thing to do during a pandemic,” he said.

He used his credit card to buy alternative currencies including Sushi
SUSHIUSD,
-0.24%
,
Tron
TRXUSD,
0.00
,
Dogecoin
DOGEUSD,
-0.30%

and Ethereum
ETHUSD,
-0.39%
.
His account fluctuates along with the broader crypto market, going up to $20,000 at one point, he said, before falling to almost zero. In recent weeks, he has accumulated his balance to $10,000 — his entire life savings — and plans to cash it out soon. He’s hoping one of the engagement rings he’s been eyeing will go on sale on Black Friday.

‘I just saw an opportunity and a lot of people are making money from day trading and that’s the thing to do during a pandemic.’


— Joseph Pizzoferrato, 33-year-old crypto investor

But when he checked the FTX application the week of November 7, it didn’t let him sell his shares. He wrote a note complaining to customer service. Two days later, the app was completely broken and Google quickly
GOOGL,
-0.50%

search informed him of the collapse and bankruptcy of FTX. “The $10,000 is completely gone and I have no one to contact,” says Pizzoferrato. “All I can hope for is something with bankruptcy court.”

He says he’s never used GoFundMe before and realizes there are other people in far worse situations than he is, but he thinks it’s worth a shot. Pizzferrato said: “I thought I would try and see if anyone wanted to bless us. He pointed to one stumbling block: he wasn’t able to tell friends or family about the GoFundMe page, because he didn’t want to spoil the surprise proposal he had planned for his girlfriend.

Another GoFundMe campaign was started by a man in the UK who said he lost his entire net worth, $12,000, to FTX. “I can no longer afford the rent and will be evicted from my place at the end of the month unless I get emergency assistance,” he wrote. MarketWatch requested an interview but he said he would only speak to a reporter if he was paid because “I’m clearly struggling financially at the moment.” (MarketWatch does not pay for interviews.)

One must be the ‘perfect victim’

Unfortunately, FTX victims turning to GoFundMe are likely to receive “minimum support,” said Matt Wade, a sociology lecturer at La Trobe University in Melbourne, Australia. GoFundMe research

“In our increasingly precarious world, one has to be the ‘perfect victim’ to receive substantial support on a platform like GoFundMe,” Wade told MarketWatch in emailed comments. The “perfect victim” is “the unfortunate soul that did everything reasonably possible to prevent disaster, but it ran into that person anyway,” he said.

“FTX investors do not meet this criterion, because they have deliberately made speculative investment decisions,” he added. “Does that mean they deserve to fall victim to potential fraud? Of course not. But in a hyper-competitive market seeking sympathy, the injustices they suffer simply won’t resonate on the platform.”

To be clear, FTX has not been charged with fraud.

‘In our increasingly precarious world, one has to be the ‘perfect victim’ to receive substantial support on a platform like GoFundMe.’


— Matt Wade, lecturer in sociology at La Trobe University in Melbourne

GoFundMe declined to comment.

Unlike traditional banks, cryptocurrency exchanges are not backed by the Federal Deposit Insurance Corporation, the government agency that insures bank deposits so that account holders are not harmed. Bank failure.

That has caused FTX account holders who do not withdraw money on time, tall and dry. The company holds about $16 billion in customer assets but has loans about 10 billion USD to cover risky bets placed by Alameda Research, a sister cryptocurrency trading firm founded by Bankman-Fried, the Wall Street Journal reported.

The number of potential parties seeking to cover losses from FTX is at 1 million and counting, according to the company’s bankruptcy filing. Reported company under investigation by the US Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission.

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