The collapse of cryptocurrency exchange FTX has had repercussions around the world, with more than a million customers losing money overnight. In France, some 50,000 to 60,000 people have been affected. As they look for legal solutions to recover their money, will the victims continue to invest in cryptocurrency?
Like hundreds of thousands of FTX customers around the world, Hassan, who lives in France, experienced a shock in early November.
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“I’m crying,” he tweeted Nov. 8, after FTX Founder and CEO Sam Bankman-Fried tried to reassure everyone that the U.S. and U.S.-based company Bahamas was fine.
The next day, as the stock market began to close, Hassan wrote: “In one day, I lost everything I had invested in a year. It’s awful.”
Life savings are gone
FTX was one of the largest digital currency exchanges, which allows users to exchange cryptocurrencies, like Bitcoin, for conventional cash or other digital currencies.
When FTX collapsed, at least $1 billion in customer funds were frozen and the company filed for bankruptcy on November 11.
Overnight, Hassan lost 26,000 euros – all of his savings.
“It’s a very bad memory,” he told RFI.
In December, Bankman-Fried was arrested in the Bahamas and extradited to the United States, where he was charged with fraud.
“Being cheated on is not a good experience,” Hassan said. “I live alone with my 15 year old son and it is difficult. We canceled vacations, and now we have to be careful what we spend. I’m in the red with my bank.
One among thousands
Lawyer Ronan Journoud advised some of the French victims who joined a support group on Telegram. He estimates that there are around 55,000 French customers who have lost money with FTX.
“There are all kinds of people,” he told RFI. “There are people who have lost 1,000 or 2,000 euros, and that’s not a lot of money for them. And even people who have lost a lot more, and it’s still not a lot. And then there are victims who lost almost everything because FTX was a highly respected company.
Listen to an interview with lawyer Ronan Journoud in the Spotlight on France podcast:
Some inexperienced investors, or lured by promises of easy investments, put most – if not all – of their savings into cryptocurrency.
Hassan said he held holdings on other platforms, but most of it was in FTX.
“I have a lot of anger and sadness,” he said. Angry with himself, he is ashamed of having lost so much money, and he hasn’t talked about it with many people.
For Journoud, who has a personal and professional interest in cryptocurrency but was not an FTX client (“I would never put a dollar in a business in the Bahamas,” he said), victims like Hassan need support, above all.
“People need to talk to each other first, to know they’re not alone,” he said. “Some people have had a really, really bad time. And we talked to them, saying there are a lot of people in your situation. I think that was the most important thing in the beginning.
But after the discussion come the practicalities. FTX was based in the United States and the Bahamas, and legal proceedings against Bankman-Fried are ongoing there.
Any customer can file a claim with the Claims Agent in the United States, which Journoud says encourages all victims to do, as it is a relatively simple form to complete.
The process will take years, but customers could recover a certain percentage of their losses, depending on how much the court recovers from the company.
Find ways to get the money back
Beyond this process, French victims could also consider joining class action lawsuits against companies that promoted FTX services, but Journoud says an easier way to do this is to seek indirect investors in FTX and to try to obtain money from them in French or European courts.
“For example, if you invested in a French or European company, and that company invested everything in FTX and lost everything, it is possible to file a complaint against it,” he explained.
That’s what some investors did in the Bernie Madoff case, which saw tens of thousands of people lose their investments in what was exposed as a Ponzi scheme in 2008.
Whatever the victims decide to do, many do not leave the cryptocurrency world altogether.
“Of course, there are those who reject it saying: ‘I will never put money into it again’,” says Journoud. But they are in the minority.
Regulate the future
“Crypto is something that exists, and we should avoid situations like the collapse of FTX, but that won’t stop the development of the ecosystem,” Journoud believes.
France has become a hub for the cryptocurrency ecosystem, which means tax laws and regulations follow.
For some, including Journoud, the FTX debacle makes a strong case for the need for regulation.
“Of course in the crypto ecosystem there are people who are against regulation,” Journoud said. “But for me it’s very important to regulate players who are too big.”
He would like these platforms to be located in Europe and to be required to have sufficient funds and insurance so that users do not become victims.
The European Parliament is expected to pass legislation at the end of the year – the Crypto Asset Markets (MiCA) Bill – that would put in place EU-wide regulatory licenses by 2024.
France is anticipating this, with a bill presented to the National Assembly that would require cryptocurrency platforms to obtain a regulatory license as soon as they start operating in France.
“We need to keep the spirit of crypto, send value, money and artwork directly, without middlemen,” Journoud said. “But if there is a middleman, like crypto exchanges, we need to regulate them well.”
Listen to an interview with lawyer Ronan Journoud about the French victims of the FTX collapse in the Spotlight on France podcast here.
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What Next For French Victims Of FTX Cryptocurrency Exchange Collapse? – Tech Tribune France
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