By Evan Spicer
Director of Cryptocurrency Investigations
MyChargeBack
FTX, until about a week ago, was one of the world’s major crypto exchanges. Sam Bankman-Fried, a mere 30 years old, seemed to have been on top of the world. The public was not yet aware the exchange was little more than a bitcoin scam and the FTX collapse was imminent.
Sam Bankman-Fried was an entrepreneur with not only a leading crypto platform, but a crypto hedge fund, Alameda Research. The young crypto innovator also had a significant influence in the industry and was involved in lobbying legislators and convincing them to adopt crypto-friendly legislation.
Little did people realize then that, while he was encouraging the public to adopt cryptocurrency, his own customers would need bitcoin recovery services after the FTX collapse.
However, the crypto billionaire fell from grace and was reduced to apologizing to his investors and customers publicly. The spectacular FTX collapse occurred in just a matter of days. What really happened to FTX? Was the exchange a bitcoin scam? Can FTX customers get a bitcoin chargeback? What does this mean for the crypto market?
How Did FTX Collapse?
The problems with FTX came to light when the platform experienced a liquidity crunch. Binance proposed a takeover that would be mutually beneficial. It would effectively rescue FTX and expand Binance’s reach. The FTX-Binance merger was expected to be a win for the company and for customers.
This was just a proposal – not a contract. It nonetheless generated much interest and many headlines about the potential deal. However, just a few days later, the news hit that FTX clients would need bitcoin recovery.
After doing corporate due diligence, Binance tweeted that it was backing out of the deal. As reported by NBC, Binance tweeted:
“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.”
Not surprisingly, this raised a few eyebrows and rumors that a bitcoin scam was behind the scrapping of the FTX-Binance deal.
It turns out that FTX was being investigated by the SEC. It was shifting funds from FTX customer accounts to fund Alameda Research. This activity is similar to a Ponzi scheme and is a common tactic used by bitcoin scams. Fraudsters create shell companies and shift funds from customer accounts to fund other operations.
However, this isn’t just any fly-by-night bitcoin scam, but it was FTX – one of the largest, most respected crypto exchanges!
The illicit shuffling of funds was proven when the SEC discovered that Alameda Research had an unusual amount of FTT tokens, which are not liquid, and used on the FTX platform.
When it came to light that FTX was shifting funds around, Binance backed out of the FTX-Binance deal and sold its stake in FTT tokens. This led to mass selling, and FTX was stuck with $6 billion in withdrawals it couldn’t pay. As a result, FTX has filed Chapter 11 bankruptcy.
There are questions about bitcoin recovery following the failure of the FTX-Binance deal and if customers are going to need bitcoin recovery services to get their funds back.
Is FTX a Crypto Scam?
FTX’s activities sound familiar. They sound like a kind of Ponzi scheme, a supposed investment offering in which no trading goes on at all and customer withdrawals are funded by deposits. It’s not certain yet whether no trading was going on at Alameda Research, but one thing is for sure – Bankman-Fried was moving customer funds around between his two companies. This is the essence of a typical bitcoin scam.
What Can We Learn from the FTX Collapse?
Although there are many stories about bitcoin scams, FTX’s collapse is shocking because this was one of the largest exchanges and was widely regarded as legitimate. The discovery that it was operating a Ponzi or a flywheel scam only demonstrates the fact that bitcoin scams are widespread.
Therefore, it’s important for customers to do due diligence on all crypto exchanges and brokers they use. Dig deep and do research. Check their licenses and see if they are currently under investigation.
Be alert to bitcoin scams. Don’t share your codes or keys and make sure the crypto business reveals information about who runs it.
If you lose money in a crypto scam, it’s important to help with bitcoin recovery. Regulators and authorities will pay attention to crypto reports that provide full details and lead. MyChargeBack experts will investigate your case thoroughly and will get you started with the first steps toward bitcoin recovery.
MyChargeBack Will Investigate Your Crypto Case
If you have lost money on the blockchain through unregulated brokers, bitcoin wallet hacking or fake merchants, talk to the MyChargeBack team. Our crypto investigations will provide evidence to bolster your claim.
MyChargeBack has developed working relationships with law enforcement agencies worldwide, have extensive knowledge and experience with crypto tracking and can improve your prospects of getting your funds back.
