Customers of cryptocurrency exchange FTX will receive more than a million dollars from US politicians. But how?
Arrested earlier this month, former FTX crypto-exchange CEO Sam Bankman-Fried was an active donor to various campaigns in the US political arena. Now officials’ association with Sam is something of a black mark for officials, as Bankman-Fried’s reputation is forever tarnished by the collapse of his company due to his short-sighted actions. That’s why three groups among Democrat politicians are already going to give the money back – the funds should go to the affected FTX investors. We tell you more about what is happening.
Note that the situation of FTX clients is hard to envy. By the way, their number may be much higher than originally expected. In the first version of the bankruptcy petition, representatives of the crypto-exchange stated that the number of creditors is equivalent to 100 thousand units. However, two weeks later, lawyers made it clear that the figure could actually exceed the one million mark.
The company owes them a lot of money as well. At the time of the platform collapse, it was reported online that the amount of liquid assets in FTX’s possession was the equivalent of $900 million, while the amount of liabilities was $9 billion. As such, any amount is now important in the process and in one way or another brings the refund date closer to all clients.
FTX founder Sam Bankman-Fried
Although as experts have pointed out before, refunds can take decades. The case of cryptocurrency exchange Mt.Gox, which survived a massive hack, is proof of this. Victim-customers have still not seen their own coins.
What will happen to FTX customers?
Late last week, the Democratic National Committee (DNC), Democratic Senatorial Campaign Committee (DSCC) and Democratic Congressional Campaign Committee (DCCC) pledged to return Sam’s political donations after the former FTX CEO was charged with eight counts of crimes. Speaking to reporters, a DNC official confirmed the decision with the following quote.
Given the allegations of potential campaign finance irregularities by Bankman-Friede, we are allocating funds to return $815,000 in donations made since 2020. We will return the funds as soon as we are properly instructed in the exchange’s bankruptcy proceedings.
Ex-CEO of FTX Sam Bankman-Fried
The other two organisations are preparing to refund $103,000 and $250,000 respectively. That means the total amount of funds to be recovered exceeds a million dollars. According to Cointelegraph sources, news of similar action should be expected from Republicans. Still, Sam had previously admitted to actively supporting both parties, although it was the Democrats who publicly endorsed him.
Sam’s tweet in which he admits to donating money to both Republicans and Democrats
Recall that US President Joe Biden and press secretary Karin Jean-Pierre have refused to comment on Bankman-Fried’s connection to specific politicians. Jean-Pierre had earlier said White House officials were restricted by law to the details of the matter.
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That said, politicians aren’t the only category that wants their FTX funds back. Over the weekend it was revealed that a well-known member of the crypto community, millionaire and co-host of the Up Only podcast nicknamed Coby has decided to return the remaining sponsorship money from FTX. Judging by a screenshot from his tweet, it’s about $150,000. According to Kobe, he, along with fellow host Brian, don’t want the money raised in this way. Here’s the letter in question.
Kobe’s letter offering to return the funds received from FTX
Overall, the prolonged ‘crypto-zima’ and the story of FTX’s collapse have seriously shaken investor confidence in the digital asset industry. This is evidenced by the results of a recent survey conducted among US consumers by CNBC reporters. Some 60 percent of respondents said the risk involved in investing in crypto was too high for them. By comparison, in August 2021, only 45 percent of respondents in last year’s CNBC poll held a similar view.
Most respondents still panic about skyrocketing inflation
This year, 26 percent of respondents see the risk of investing in Bitcoin and altcoins as “moderate.” Meanwhile, only 5 percent of consumers said buying cryptocurrencies is “completely safe” from a risk-management perspective. Classified by demographic group, millennials are the most active in investing in crypto, with about 15 percent holding digital assets as their long-term investment.
So-called zoomers and Generation X are also interested in cryptocurrencies, with about 12 percent of respondents in these categories buying digital assets. Skepticism about Bitcoin has traditionally dominated among older generations.
Clearly, this will change in a positive direction for the industry in the future. Younger investors are likely to invest more heavily in crypto, while the amount of capital in the hands of the older generation will decline.
Assets held by different age groups of respondents
This fall Bank of America also conducted a similar survey, which showed that 75 percent of U.S. residents between the ages of 21 and 42 believe it is impossible to achieve above-average returns by relying only on traditional assets. In their view, diversification through alternative instruments like cryptocurrencies, real estate, private equity and commodities could yield higher returns in the future.
We believe that such a clawback initiative is good news for former FTX clients. Obviously, the extra money will be able to speed up the payout process, which in one way or another will have a positive impact on the reputation of digital assets. The latter had been the victim of a serious blow the day before, which means any idea of restoring user confidence will benefit the whole niche.
What do you think about this? Share your opinion in our Millionaire Crypto Chat. We’ll talk about other important topics related to the world of decentralized assets there as well.
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