Over a million are owed money by failed crypto exchange
Over a million people and businesses could be owed money following the collapse of the crypto exchange FTX, according to bankruptcy filings.
There have also been reports that FTX suffered a hack, taking millions of dollars of crypto from the firm.
It’s a worrying time for individuals who have money in the business.
In the UK, crypto assets are largely unregulated, and experts and financial watchdogs warn there’s little protection for consumers.
In September, financial watchdog the Financial Conduct Authority (FCA) warned that FTX may be providing financial services or products in the UK without its authorization. It said bluntly: “You are unlikely to get your money back if things go wrong.”
There is at least a liquidation process in the case of FTX, which will divide up the remains of the firm among those to whom it owes money.
Gavin Brown, Associate Professor in Financial Technology at the University of Liverpool, pointed to a recent report which suggested that “42% of exchanges which failed simply disappeared without a trace”.
But bankruptcy may not provide much comfort.
Prof Brown said: “In the event of exchange failure, or even bankruptcy, it is the investors who are on the hook for losses.”
He and other experts warned that often small investors will go to the back of the queue when what remains of a crypto business is divided up among creditors.
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