Lawyer: Taiwan FTX Victims' Status, Causes and Subsequent Events
Colin Wu . 2022-11-17 . Data
Interviewee: Enlighten Law Group

Interviewer: Colin Wu

Up to now, among the clients we have accepted, there are about 950 people in Taiwan, and there are about four people who have lost more than $5 million, and the overall victimization amount may be more than $150 million, and 90% are individual victims/retail investors. There were about 30 victims in mainland China, with one victim with a loss of more than $5 million.

At the time of Lehman’s bankruptcy, the total number of victims in Taiwan was over 50,000, with a total amount of more than $2 billion. We suspect the number of victims in Taiwan may be even higher this time. The previous Lehman liquidation used three years to recover about 30% of the money. We expect that this time around, FTX may also take a similar three-year period, with the same goal of expecting to recover 30% of the funds (although more complex and difficult).

Compared with other exchanges, Taiwan is more inclined to use FTX, probably with his belong to the non-Chinese founded exchange (worried about personal information leakage), in addition to local partners in Taiwan, ambassadors also very effective promotion. FTX in Taiwan is also very convenient access to funds, so lead to Taiwan in this FTX crashed more victims.

The more important point is that FTX launched 8% interest rate of the U.S. dollar stable currency interest-bearing products. In Taiwan bank deposits interest rate is almost 0, mortgage, credit loans interest only need to be about 3%, so led to the product was generally popular. Some people even arbitrage by borrowing from banks and re-depositing into FTX. One problem with this is that FTX has the right to use it for transactions, etc., and also states that it may suffer losses, so it may be in a different tier and position in the final liquidation.

The FTX case is now in the U.S. judicial process, so the best strategy for creditors who want to be compensated is actually to follow the U.S. judicial process and apply to the court to participate in the bankruptcy process for property distribution, this is what our firm is currently trying to do. They may soon form a creditor group, and then there will be a bankruptcy committee, and then form the bankruptcy administrator of the debt, and propose a reorganization plan, etc.

For Taiwan’s authorities, after all, FTX is an exchange based abroad, for Taiwan’s investors, he is their own Internet to carry out related investments or transactions, these transactions it actually does not occur in Taiwan, although he is related to Taiwan’s investors, so Taiwan’s regulatory authorities are unlikely to follow up intervention. Even in the United States, its executive branch is unlikely to interfere with the operation of the courts.

For different creditors, whose priority is higher? There are some more specific claims that it would rank as priority bonds. For example, the bankruptcy administrator’s compensation, court-related expenses, employee salaries, funds related to employee rights, etc., which will also be liquidated first. Most of the other claims are ordinary claims. In principle, as long as you have filed a claim with the court, in principle, the claims should be divided equally.

FTX group more than 100 subsidiaries, how many assets he actually has, may not have been really well investigated. If it enters the so-called bankruptcy reorganization stage, in fact, the payout to the investors will not be 100%, he will definitely be discounted, and the final percentage will be negotiated, then of course, if he finally proposes the reorganization plan, it may not be accepted if it is too unfriendly to the creditors.

Whether or not SBF, FTX employees, their promoters, community representatives, etc., will be subject to criminal liability depends on whether or not they had knowledge of the company’s internal decisions, and whether or not they had subjective knowledge, before further discussing the possibility of criminal prosecution.

Finally for victims, we suggest that losses under $10,000 are not necessary to seek an attorney. If the loss is over $100,000 or more, you may want to consider the help of a lawyer. Because cases are, after all, complex, it is difficult to go through them independently without professional assistance.

Many people currently suggest taking screenshots of their assets in FTX so that they can prove the amount of assets they have in FTX in the future. Active search for evidence is certainly a good thing, but it needs to be an effective search for evidence, screenshots because the possibility of artificial alteration or manufacturing is too high, it is not the best way to prove the trajectory of evidence is also not true. In my own practical experience, after applying to FTX to withdraw funds, you will receive a letter of withdrawal application, which is relatively reliable, if you are using Google Mail, you can further put the letter into Google Vault. in addition, the previous deposit and withdrawal to the FTX chain records, please save first.

Because FTX is a centralized exchange, all transaction records are based on its internal books, you can only hope that FTX will not delete or tamper with the books, otherwise it will be like another case of BitPoint that made Taiwan investors lose their money, in the court trial in a desperate situation.

In addition, we suggest that you give up all irrational thoughts and beware of people who want to collect money or scam under various names.

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