People who say they lost money in the collapse of crypto exchange FTX are turning to strangers to recoup their losses by creating GoFundMe fundraising pages.
They include a man who says he blew his life savings to surprise his girlfriend with her “dream” engagement ring. Now, “like many others my app is frozen and all the money is gone,” he says on his fundraising page, which aims to raise $10,000.
In another, a Florida man posted a photo of his young daughter with the caption, “Stolen life savings.” He describes himself as a “normal person” with a job who lost “all” his money when FTX collapsed. “You can call me stupid or stupid but I didn’t know… It will take time to recover my savings but today I am asking for any help if you can,” he wrote on the GoFundMe page.
FTX-related GoFundMe pages appear as FTX founder Sam Bankman-Fried says he is attempting a fundraising campaign of his own. He told a Vox reporter that he is trying to raise $8 billion in two weeks to save the company and return money to investors and account holders. Bankman-Fried allegedly used FTX client funds to cover losses at Alameda Research’s hedge fund, and at this point some FTX clients are trying to get other people to cover their own personal losses.
“I just saw an opportunity”
Those account holders include 33-year-old Joseph Pizzoferrato, who set up the GoFundMe to try to get the engagement ring money back. He started using FTX about a year and a half or two years ago, he told MarketWatch. Crypto seemed complicated, but the FTX app was simple and easy to use, so it seemed like a good place to start, he said.
Pizzoferrato, who lives in Las Vegas and is a director at a life insurance company, said he was initially skeptical of cryptocurrencies, but took notice when Bitcoin BTCUSD,
reached $60,000. “I just saw an opportunity and a lot of people were making money day trading and it was something to do during the pandemic,” he said.
He used his credit cards to buy altcoins including Sushi SUSHIUSD,
and Ethereum ETHUSD,
His account fluctuated along with the broader crypto market, swelling as high as $20,000 at one point, he said, before falling to almost nothing. In the past few weeks, he had built up his balance to $10,000—all of his life savings—and planned to cash out soon. She was hoping one of the engagement rings she was eyeing would be released on Black Friday.
““I just saw an opportunity and a lot of people were making money day trading and it was something to do during the pandemic.”“
But when he checked the FTX app the week of November 7th, it wouldn’t let him sell his holdings. Wrote a note complaining to customer service. Two days later “the app was completely broken” and a quick Google GOOGL,
The investigation informed him of FTX’s decline and bankruptcy. “It’s $10,000 completely wasted and I have no one to turn to,” Pizzoferrato said. “All I can hope for is something with the bankruptcy court.”
He said he’s never used GoFundMe before and realizes there are other people in much worse positions than his, but he thought it was worth it. “I thought I’d give it a shot and see if there’s anyone who wants to bless us,” Pizzoferrato said. He pointed out one problem: He couldn’t tell his friends or family about the GoFundMe page because he doesn’t want to ruin the surprise proposal he was planning for his girlfriend.
Another GoFundMe campaign was started by a British man who says he lost his entire net worth, $12,000, to FTX. “I can no longer pay my rent and will be evicted from my accommodation at the end of the month unless I receive urgent support,” she writes. MarketWatch requested an interview, but he said he would only speak to a reporter if he was paid because “I’m obviously struggling financially right now.” (MarketWatch does not pay for interviews.)
Someone has to be the “perfect victim”
Unfortunately, FTX victims who turn to GoFundMe will likely receive “minimal support,” said Matt Wade, a sociology lecturer at La Trobe University in Melbourne, Australia who researches GoFundMe.
“In our increasingly precarious worlds, one has to be the ‘perfect victim’ in order to garner meaningful support on a platform like GoFundMe,” Wade told MarketWatch in emailed comments. The “perfect victim” is “the unfortunate soul who did everything reasonably possible to prevent disaster, but it befell him anyway,” he said.
“FTX investors do not meet this criterion because they made a deliberate decision to make a speculative investment,” he added. “Does that mean they deserve to be victims of potential fraud? Of course not. But in hypercompetitive markets looking for sympathy, the injustices they’ve suffered simply won’t resonate on the platform.”
To be clear, FTX has not been accused of fraud.
““In our increasingly precarious worlds, one has to be the ‘perfect victim’ in order to garner meaningful support on a platform like GoFundMe.”“
GoFundMe declined to comment.
Unlike traditional banks, crypto exchanges are not backed by the Federal Deposit Insurance Corporation, the government agency that insures bank deposits so account holders don’t lose out in the event of a bank failure.
This left FTX account holders who did not cash out at the right time high. The firm held about $16 billion in client assets but had borrowed about $10 billion to cover risky bets placed by Alameda Research, a sister cryptocurrency trading firm started by Bankman-Fried, the Wall Street Journal reported.
The potential number of parties seeking to recover damages from FTX is 1 million and counting, according to the company’s bankruptcy filings. The company is reportedly under investigation by the US Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission.