People who say they have lost money in the collapse of crypto exchange FTX are turning to strangers to cover their losses by setting up GoFundMe fundraising pages.
They include a man who says that he lost the money he was saving up to surprise his girlfriend with her “dream” engagement ring. Now, “like many others my app is frozen and all the funds are gone,” he says on his fundraiser page, which aims to collect $10,000.
On another, a Florida man posted what appears to be 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” of his money when FTX imploded. “You can call me stupid or dumb, but I didn’t know…It will take time to build my life savings back, but today I ask for any help if you can,” he wrote on the GoFundMe page.
The FTX-related GoFundMe pages are popping up as FTX founder Sam Bankman-Fried says he’s attempting a fundraising campaign of his own. He told a Vox reporter that he’s trying to raise $8 billion in two weeks to save the company and return money to investors and account holders. Bankman-Fried reportedly used FTX customer funds to cover losses at his Alameda Research hedge fund, and at this point some FTX customers 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, the one who set up the GoFundMe to try to get back his engagement ring money. He started using FTX about a year and half or two years ago, he told MarketWatch. Crypto seemed complicated, but the FTX app was simple and easy to use, so it felt like a good place to start, he said.
Pizzoferrato, who lives in Las Vegas and is a manager at a life-insurance company, said he was initially skeptical of cryptocurrency but took notice when Bitcoin
hit $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
His account had ups and downs along with the broader crypto market, swelling up to $20,000 at one point, he said, before crashing down to near-zero. In recent weeks, he had built up his balance to $10,000 — his entire life savings — and was planning to cash out soon. He was hoping one of the engagement rings he was eyeing would be on sale 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 Nov. 7, it wouldn’t let him sell his holdings. He wrote a note complaining to customer service. Two days later “the app was completely broken” and a quick Google
search informed him of FTX’s downfall and bankruptcy. “It’s $10,000 completely gone and I have no one to reach out to,” Pizzoferrato said. “All I can hope for is something with bankruptcy court.”
He said he’s never used GoFundMe before and realizes there are other people in far worse positions than his, but thought it was worth a shot. “I figured I would try it and see if there was anyone who wants to bless us,” Pizzoferrato said. He pointed out one hitch: he hasn’t been able to tell 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 U.K. 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 get urgent support,” he writes. MarketWatch requested an interview but he said he would only talk to a reporter if he were paid because “I am obviously struggling financially at the moment.” (MarketWatch does not pay for interviews.)
One has to be the ‘perfect victim’
Unfortunately, FTX victims turning to GoFundMe will probably get “minimal support,” said Matt Wade, a lecturer in sociology 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 substantial 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 avert disaster, but upon whom it was met anyway,” he said.
“FTX investors don’t meet this criteria, because they made a willful decision to make a speculative investment,” he added. “Does that mean they deserve to be victims of potential fraud? Of course not. But in hyper-competitive markets of sympathy-seeking the injustices they have 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 substantial support on a platform like GoFundMe.’”
GoFundMe declined to comment.
Unlike traditional banks, crypto exchanges aren’t backed by the Federal Deposit Insurance Corporation, the government agency that insures bank deposits so account holders don’t lose out if a bank fails.
That has left FTX account holders, who didn’t cash out at the right time, high and dry. The company held about $16 billion in customer assets but had lent about $10 billion to cover risky bets placed by Alameda Research, a sister crypto trading firm started by Bankman-Fried, the Wall Street Journal reported.
The potential number of parties seeking to recoup losses from FTX is at 1 million and counting, according to filings in the company’s bankruptcy. The company is reportedly under investigation by the U. S. Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission.