Fraudsters have found a way to make money from victims of the FTX cryptocurrency exchange bankruptcy. How do they do it?
The collapse of cryptocurrency exchange FTX and the huge losses of its customers have opened up new opportunities for fraudsters. In a recent press release, the Oregon Division of Financial Regulation (DFR) warned crypto investors that criminals are already posing as “authorized entities” that could supposedly compensate FTX customers for small fees. Officials urged traders to thoroughly investigate any such offers before sending their funds to anyone. We tell you more about what’s going on.
The bankruptcy of cryptocurrency exchange FTX is one of this year’s major industry failures. It joins the list of significant collapses along with the death of the Terra ecosystem in May, the problems of crypto fund Three Arrows Capital, and the end of the BlockFi trading platform. Read more about the most significant negative events of 2022 here.
FTX cryptocurrency exchange logo
It’s worth noting that cryptocurrency exchange FTX users have tried many different ways to avoid being among the victims of bankruptcy. For example, after FTX’s problems emerged, it became clear that the platform allows withdrawals for Bahamian residents. Consequently, some major traders took it upon themselves to prove their residency there, including by using fake documents beforehand.
Those less fortunate are now hoping to recover their own digital assets. At the same time, scammers are taking advantage of the situation and trying to make money from rookie victims.
How to lose money on cryptocurrencies
The Oregon Division of Financial Regulation cited an example of a US State Department clone website. It published a fake offer to help FTX customers get their assets back from FTX. True, the purported “help” was promised by the scammers for the identity of each of the victims. Accordingly, no one received any compensation even close.
Here’s how the agency’s administrator, TK Keane, commented. His retort is cited by Cointelegraph.
We’ve said it before, but if something sounds too good to be true, it probably is. We urge everyone to consider the offers they receive carefully and transfer funds wisely, as well as protect their personal details carefully.
Note that sharing crypto-assets and revealing personal details to strangers makes no sense in principle. It is an extremely dangerous idea which more often than not leads to nothing good.
Former FTX CEO Sam Bankman-Fried
Keane also pointed out that there are many things in the crypto industry that look legitimate, but are actually against the interests of investors. In addition to the warning, DFR officials also urged victims of cryptocurrency-related fraud to file complaints against them.
😈 YOU CAN FIND MORE INTERESTING THINGS ON OUR YANDEX.ZEN!
Meanwhile, a consortium of FTX customers has filed a class action lawsuit against the bankrupt exchange, demanding confirmation that the company’s assets belong specifically to customers. Representatives of the association require that losses are compensated to former users of the trading platform not last, that is, the court should not give preference to creditors of FTX.
It should be noted that there are more than enough people who want their own assets from FTX. They include the BlockFi trading platform, which also went bankrupt because of its close relationship with the exchange. Management now wants to recover the equivalent of $546 million in Robinhood shares.
Arrest of ex-CEO of FTX Sam Bankman-Friede
According to Decrypt’s sources, the lawsuit alleges that FTX failed to separate from the bulk of the money and embezzled customer funds despite all its promises. This is why the plaintiffs are insisting that they should be compensated in the first place.
In total, the FTX collapse could have affected more than 1.2 million customers in the US alone, based on the company’s user numbers. If the court grants the aforementioned claim, many of them could see their money for the foreseeable future. However, given the complexity of the situation and the sophistication of fraud by Sam Bankman-Friede, this is hard to believe. However, it may take quite some time for all the details of the case to be sorted out and the verdict pronounced.
We believe that the situation once again shows the unscrupulousness of crooks who use any tragedy of others to try to make money. And judging by the fact that representatives of major agencies warned about the scheme, such a plan of hackers really worked. Which means digital asset lovers need to be doubly careful.
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