Collapse of FTX to start legal battle in UK with crypto exchange causing losses of 80,000 UK customers
The spectacular collapse of FTX could open the door for lawsuits in the UK as thousands of Britons have been found to have lost money.
While the founder of the US crypto exchange, Sam Bankman-Fried, apologized in an email to employees, claiming that his company “didn’t fully realize the mess,” lawyers claimed the company wasn’t operating legally even on UK shores. used to be. Can handle challenges. Like in America.
FTX, which allows users to buy and sell digital ‘coins’ like bitcoin, went bankrupt earlier this month, leaving nearly 80,000 UK customers without money.
Remorse: FTX founder Sam Bankman-Fried (pictured with model Gisele Bündchen) apologizes to employees, claiming to ‘not realize the full extent’ of his company’s mess
Nicola McKinney, partner at Quillon Law, specializing in complex commercial and cross-border litigation, said: “There are a number of circumstances where a claim involving foreign voters or co-defendants can be brought and prosecuted in the UK.”
He clarified that a negligence case can be brought before an English court if there is a breach of contract in the country or if damage is caused in the UK.
McKinney said: “Such agencies may provide a ‘gateway’ to proceedings against a foreign-based defendant, including FTX group companies, or individual wrongdoers.
“Especially in negligence claims, the potential plaintiff’s place of residence is often linked to the place where the damage occurred, and this could potentially mean that the lawsuit is brought here.”
The collapse of FTX left an estimated 1 million creditors billions of pounds in losses – the top 50 clients owe more than £52 million on average – and sent chills through the crypto world. Some 8pc users were based in the UK, suggesting 80,000 Britons were lost.
FTX, Bankman-Fried and the entourage of the company’s top executives are already facing legal action from across the pond. Account holders have filed a lawsuit in Miami alleging that Bankman-Fried and celebrities, including US players Tom Brady and Shaquille O’Neal, defrauded customers by advertising “unregistered securities.”
These are stocks and other assets that are not registered with the US financial watchdog and should only be made available to ‘sophisticated’ investors.
Several lawsuits are already pending to determine whether cryptocurrencies meet this definition. But lawyers have argued that a “wave” of lawsuits against FTX could erupt as investors try every possible way to get their money back.
FTX allowed users to borrow money to place their bets on crypto. But Bankman-Fried claimed it was borrowing from its own trading firm, Alameda Research, pushing FTX to the sidelines.
Almeida used his own FTX “coin,” known as FTT, as collateral for his loans – leaving the entire Bankman-Fried empire vulnerable as FTT fell in value.
Bankman-Fried told staff: “I deeply regret my failure as a supervisor.” But FTX’s new manager, who oversees the bankruptcy, claimed that Bankman-Fried ran FTX as his “personal fiefdom.”
The collapse of FTX has embarrassed its supporters, including hedge fund magnates, venture capital titans and even celebrities like supermodel Gisele Bündchen.
McKinney said the lawsuits are likely to continue initially in the US and the Bahamas, where bankruptcy proceedings have already begun.
She added: ‘If exchange assets are found to be recoverable in the UK, if legal entities or directors are established in the UK and if the English legal system is recognized as a useful forum for recovery by creditors. Admittedly, this could open the door to potential claims this side of the Atlantic.”
Nationwide crypto alarm sounds
Nationwide has become the latest lender to be cautious about cryptocurrencies after the FTX implosion.
The mortgage bank said customers will now have a daily limit on their account, which determines how much money they can borrow from cryptocurrency providers.
A spokesperson for the group said the measures were taken to “protect our members from cryptocurrency scams.”
The nationwide move follows similar moves from rivals Santander, TSB, Virgin Money and Starling Bank.
Digital bank Starling told customers on Tuesday it was stopping all card payments for crypto exchanges and restricting all outgoing and incoming wire transfers associated with such companies.
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