When BlockFi’s marketing materials and sales agents said his investment was safe and could be returned at any time, he took their word for it.
Consequences of the collapse of FTX
The sudden collapse of the crypto exchange has taken the industry by surprise.
- A spectacular rise and fall: Who is Sam Bankman-Fried and how did he become the face of crypto? Daily chart spectacular ups and downs of the man behind the FTX.
- Clinging to Power: Email and text messages show FTX attorneys and executives struggle to convince Mr. Bankman-Fried relinquished control of his crumbling company.
- Collateral damage: BlockFi, a crypto lender targeting casual investors eager for a piece of the crypto craze, filed for bankruptcy on Nov. collapsed by financial relationship with FTX.
- Symbiotic relationship: Mr. Bankman-Fried built FTX in part to support the commercial business of Alameda Research, his first company. The relationship between two entities is currently under scrutiny.
“They sold it to me, that there was no risk,” Mr. Butkus said, adding that he was unaware that BlockFi, which had borrowed money from FTX, had a close connection with the exchange. this.
Much of the money Butkus, a self-employed entrepreneur, has invested comes from the recent sale of his home in Plainfield, Ill. He hopes to increase his savings with interest on his BlockFi loan and then use the money to build a new home for his family. Now he wonders where his family, who are staying temporarily with his wife, will end up living.
Attorneys for FTX and BlockFi did not respond to requests for comment.
FTX, founded by Sam Bankman-Fried and once a giant in the crypto industry, collapsed last month after several major commercial firms withdrew their funds amid allegations that This exchange used billions of dollars in customer deposits to underwrite Alameda Research. Cryptocurrency trading company which he co-founded. The exchange’s demise is all the more astounding as FTX has gained a legitimacy through a flashy advertising campaign that showcases its product as safe, fun, and easy to use.
Federal authorities in New York are currently trying to determine whether a criminal complaint should be filed against Mr. Bankman-Fried and others about the collapse of the company and the inappropriate use of customer deposits. Mr Bankman-Fried, in a media attack last week, asserted that he never intended to defraud anyone and did not fully know the amount of customer funds that had been transferred to Alameda.
Frank Friemel, 39, is among FTX customers wondering if they will ever get their money back from the now-bankrupt exchange. When he opened an account with FTX in March, Mr. Friemel said he knew it was unregulated but wasn’t too worried.
He said that, as the second largest cryptocurrency trading platform in the world, with the financial backing of well-known professional investment firms such as Sequoia and SoftBank, FTX is on a solid foundation. sure.