‘The money is gone’: people who lost out in FTX’s collapse | Cryptocurrencies

The UK parliament this week heard during testimony on the failed cryptocurrency exchange FTX that most of the money it held came from institutions. Yet with about $8bn still owed to depositors, its collapse has still left many individuals nursing significant losses.

Here we speak to some of those retail investors about the huge sums they were unable to withdraw – as much as $110,000 in one case. All of them spoke on the condition of anonymity.

‘A lot of us feel cheated’

William, a construction site manager from California, was woken by a text from friends about potential trouble at FTX in the early hours of 8 November. At the time, the 40-year-old had about $85,000 of fiat currencies on the exchange, plus three bitcoins worth about $55,000 and about $10k in other altcoins – a significant chunk of his assets.

“I opened the FTX app, and tried to take it all out, but fiat withdrawals were limited to $25,000, so I did that and was told to wait 24 hours,” he says. “When I tried to withdraw the bitcoins I got an error message.”

Over the next few days William was able to make one $25,000 withdrawal and convert his altcoins to ethereum. “I have lost $60,000 and whatever my three bitcoins would be worth now [$50,691 as of Friday]. I had plans to build a new family home with that money. We’re not going to be out on the street, but it hurts. He says he can’t tell anyone, because it’s “so embarrassing”. But the collapse has not changed his views about crypto. “I still think this is going to be the future, these bad actors are not going to stop the technology going forward.


“I and many others – we got caught up in a kind of intense euphoria last year, about the small guy’s chance of going from zero to hero, and this is now the morning after. The hardest thing about this loss is – we didn’t get the chance to lose the money ourselves, it was just taken from us.”

‘I don’t have this kind of money to lose’

Laura, a data analyst from the UK, says she has been “absolutely put off” trading in cryptocurrencies after finding herself unable to withdraw about $2,300 from FTX last week. She had been hoping to make some small investment gains to put towards a house deposit.

“At the beginning of the year I started trading on FTX because I wanted to buy dollars, as the pound was losing value,” the 40-year-old says. “Earlier this month I started hearing about it being in trouble and [main rival exchange] Binance potentially wanting to acquire FTX, but I didn’t think much of it.”

When the news hit that FTX had filed for bankruptcy, Laura, like many others, could still see her money sitting in her virtual wallet, but could not get it out. “When a lot of people trust in something, you believe it is stable and reliable. I was basically sold lies,” she says. “I don’t have this kind of money to lose. This should be treated as fraud.”

‘I was very stressed, I couldn’t sleep’

Jamie reckons it will take him about 20 years to save the amount he lost in the FTX collapse. The tech worker, who is in his 30s and lives in Germany, doesn’t want to reveal how much he had lost, but he’d made a significant return on the £3,500 he invested in cryptocurrencies since 2017. He says he lost some money trading in 2018, but that “pales in comparison with last week”.

At the time of the collapse, all his funds were on FTX: he had moved to the exchange last year after hearing “rumours that Binance was in trouble and FTX was safe”. So when “rumours started gaining momentum” around FTX, Jamie “thought it was bullshit”. He tried to move his funds off the exchange on 8 November, to no avail. “I’m in the stage where I’m laughing about it, but last week I felt very ill,” he says. “I was very stressed. I couldn’t sleep.”

He had been hoping to use the funds for a deposit on a house, and had seen crypto as a backup during “turbulent” financial times. “Now that’s gone.”

Nevertheless, he would invest in crypto again: “For many my age with decreasing life standards, no way to get on the property ladder and meaningless jobs, crypto has been a godsend. The real world has scant opportunities compared with the digital wild west.”

‘I fully expect to lose it all’

In the UK, despite losing about $12,000, Andrew, 57, feels “reasonably philosophical” about the FTX collapse. “This is crypto land … You don’t invest if you don’t expect these events to happen,” says the IT professional from London, who has been speculating since 2015. “It’s a lot to lose, however, that’s the risk of fishing in shark-infested waters. I spread my assets across multiple exchanges for precisely this reason.”

Like many others, Andrew was unable to withdraw his funds from FTX last week. “I fully expect to lose it all – I’ve written it off.” It’s the first time the 57-year-old has lost so much, but he says: “There’s losing when you make a bad trade, but this is loss due to deliberate manipulation of client funds.”

Since the crisis last week, Andrew has moved the funds he had in other exchanges into stablecoins – cryptocurrencies that attempt to peg their value to an external reference such as the US dollar.

Q&A

What is a stablecoin?

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A stablecoin, like the name suggests, is a type of cryptocurrency that is supposed to have a stable value, such as US$1 per token. How they achieve that varies: the largest, such as tether and USD Coin, are effectively banks. They hold large reserves in cash, liquid assets, and other investments, and simply use those reserves to maintain a stable price.

Others, known as “algorithmic stablecoins”, attempt to do the same thing but without any reserves. They have been criticised as effectively being backed by Ponzi schemes, since they require continuous inflows of cash to ensure they don’t collapse.

Stablecoins are an important part of the cryptocurrency ecosystem. They provide a safer place for investors to store capital without going through the hassle of cashing out entirely, and allow assets to be denominated in conventional currency, rather than other extremely volatile tokens.

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“I have withdrawn my assets from pretty much everywhere just until the dust settles. I’d rather be cautious,” he says. “When it blows up you have to make sure you can ride it out – [for me] it’s been damaging but not life-threatening.”

‘I know that this money is gone’

IT worker Emanuele, 38, from Switzerland, has been investing in crypto for years, and had been using FTX for about two years when it collapsed. “Most of the time I kept a six-digit balance on it, earning passive interest. The platform was looking solid and reliable,” he says.

“On 7 November I read the first rumours about FTX’s possible insolvency and decided to immediately withdraw most of my funds, which I luckily managed to do,” he says. “In my mind I was almost sure I was being overly cautious, but I decided not to take any risks and moved it to my offline wallets.

“I left almost $12k worth of crypto coins on FTX, because I wasn’t expecting the fourth-largest exchange to just go out of business in a matter of hours. Then they stopped all withdrawals. I know that this money is gone, so I’ve still lost quite a lot.”

Emanuele, who has invested about $200,000 in crypto tokens to date which, at their peak in April 2021, had climbed to a combined value of about $500,000, says he has learned his lesson from the collapse, but the episode has not put him off crypto generally.

“I’m disappointed, but everything is risky in this world, and there are many ways to lose money. I’m still hoping to make big profits with crypto – the dream is still that it’ll enable me to retire one day.”