Larry David Addresses FTX Ad, Defunct Exchange Signals Full Payout for Customers

The value of customers’ cryptocurrency claims is tied to FTX’s bankruptcy date

By: André Beganski

February 5, 2024

GM! This week: Larry David acknowledges his FTX Super Bowl ad, FTX says it expects to repay customers in full, the SEC looks to dismiss a lawsuit and avoid sanctions, Binance gets sued for Hamas-related activity, crypto miners react to an “Orwellian” energy survey, and a former financial officer for Terraform Lab is extradited to South Korea.

FTX Bankruptcy

Bankrupt crypto exchange FTX said the firm’s former customers should expect a full repayment — but customers who lost digital assets in FTX’s implosion won’t see their coins returned.

The judge overseeing FTX’s bankruptcy approved a motion on Wednesday to convert bankruptcy claims in digital assets to U.S. dollars. It means customers who lost coins like Bitcoin will receive dollars back once FTX’s bankruptcy runs its course.

When FTX filed for bankruptcy in late 2022, the market for digital assets had already been imperiled, and Bitcoin hovered around $17,000. Claims paid on digital assets are valued at the point FTX filed for bankruptcy, which, for many customers and creditors, “won’t feel like that’s true payment in full from where they started,” FTX lawyer Andrew Dietderich said in court.

Additionally, plans to relaunch FTX have been shelved, Dietderich said, although the bankruptcy estate still has “valuable customer data and information to monetize.”

Larry David Lawsuit

Curb Your Enthusiasm star and comedian Larry David recently addressed his role in a Super Bowl advertisement for FTX that premiered two years ago. Pulled aside by the Associated Press during the premiere of the final season of his HBO series, David said he felt like “an idiot” for doing the stint to the benefit of Sam Bankman-Fried’s firm.

“I asked people — friends of mine who were well versed in this stuff — ’Should I do this ad? Is there anything wrong with this, with me doing this?’” David recalled, adding he had received assurances of FTX’s legitimacy. “So like an idiot, I did it.”

When asked about a class-action lawsuit levied against former promoters of the exchange, including Tom Brady, Shaquille O’Neal, and himself, David said he “would love to be part of” it too because he was paid in crypto and “lost a lot of money.”

SEC Sanctions

Threatened with the possibility of sanctions, the Securities and Exchange Commission asked a federal judge last week to dismiss a lawsuit it brought against a crypto firm this past summer.

Dubbed DEBT Box, the SEC accused the firm of defrauding investors by selling $50 million worth of unregistered securities. After the agency obtained a temporary restraining order and asset freeze against DEBT Box, however, the lawsuit’s presiding judge raised concerns over “materially false and misleading representations” made by the SEC as part of its regulatory efforts.

The SEC’s enforcement-based about-face comes with assurances of goodwill. While DEBT Box asked a federal judge to order the SEC to pay for costs incurred as a result of the asset freeze, in addition to its legal fees, the SEC said some mandatory staff training for its staff would be sufficient.

Hamas Lawsuit

The world’s leading crypto exchange, Binance, has been accused of facilitating violence conducted by Hamas in a new civil lawsuit — brought by a former Hamas hostage and the relatives of two men killed in the terrorist group’s attacks on Israel.

It appears to be the first lawsuit of its kind, Bloomberg reported, after Binance pleaded guilty to violating anti-money laundering laws and sanctions last year. According to government claims, Hamas’ military wing, al-Qassam Brigades, raised money using Bitcoin transactions for the Palestinian resistance on Binance’s platform.

There is some legal precedence for victims suing financial players guilty of enabling bad actors. International banking giant HSBC was itself the target of a lawsuit brought by families of the victims who died in Mexican drug cartel violence after the bank was mired in a money laundering controversy of its own. 

EIA Anxiety

A provisional survey from the U.S. Energy Information Administration (EIA) has ruffled feathers among some crypto miners, as the government seeks a more granular understanding of how crypto mining operations in the U.S. consume power.

Requiring crypto miners identified by the agency to report details on energy use, the director of mining firm Cathedra Bitcoin, Marty Bent, slammed the EIA’s initiative as “Orwellian” because it requires specific information about hash rate data and the composition of firms’ mining fleets.

Lawmakers with a track record of being tough on crypto, like Massachusetts Senator Elizabeth Warren, have honed in on energy consumption as a general criticism of crypto. And it appears commercial miners are required to respond to the new survey under federal law, per CoinDesk.

Terra Extradition

Han Chang-joon, Terraform Labs’ former CFO, has been extradited to South Korea, according to a statement from law officials in Montenegro. Accused of “several criminal offenses related to financial investments services, investments, and the capital markets,” Chang-joon faces the threat of life imprisonment in South Korea, Montenegrin officials said.

Chang-joon was arrested alongside Terraform Labs co-founder Do Kwon last March, as both tried to leave the country using falsified passports. While Chang-joon’s extradition is settled, Kwon, meanwhile, awaits a decision from Montenegro’s appeals court regarding his extradition. Both the U.S. and South Korea look to prosecute Kwon in their respective regions.

Other Headlines

  • FTX’s $400m Hacking Case May Have Been Solved  (DL News)

  • He’s Lost His Marriage, His Followers and His Lamborghini (NY Times)

  • Polygon Labs Lays Off 60 Employees, About 19% of its Staff, CEO Says (TechCrunch)

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