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Desperate FTX users employ shady tactics to bypass bankruptcy process

11 Nov, 20223 min readEthereum
Desperate FTX users employ shady tactics to bypass bankruptcy process

Social media is flooded with posts from desperate FTX users asking for help to withdraw locked funds.

According to Zane Tackett, the former Head of Institutional Sales at FTX, Bahamians are authorized to take funds off the platform despite a freeze on withdrawals at the troubled exchange.

1) Per our Bahamian HQ's regulation and regulators, we have begun to facilitate withdrawals of Bahamian funds. As such, you may have seen some withdrawals processed by FTX recently as we complied with the regulators.— Zane Tackett (@tackettzane) November 10, 2022

As a result, Bahamian citizens have begun offering services to funnel locked funds out of the exchange. Furthermore, some FTX users are dangling significant bribes to FTX employees to change their country of residence account settings to the Bahamas.

Any FTX employees willing to change my accounts country of residence to Bahamas to facilitate withdrawal I am offering $1 million and unlimited legal feesDM me (serious inquiries only)— Austerity Sucks (@austerity_sucks) November 11, 2022

On-chain data shows withdrawals happening

Despite the questionable legality, morality issues, and the scope to be scammed by going this route, @statelayer posted a screenshot of transactions showing withdrawals from FTX. He added that FTX’s Tether balance has since halved as a result.

Although @statelayer said the transactions are “people clearly abusing this Bahamas loophole,” it is unclear whether these withdrawals relate to FTX employees or desperate users who have found a reliable path off the exchange.

Bitcoin Magazine Analyst Dylan LeClair posted screenshots of a user who managed to get “KYC’d,” subsequently withdrawing significant sums off the platform.

Bahamas loophole splits the community

Commenting on the above user successfully managing to withdraw his money, @depression2019 supported the move, saying he would probably do the same if he had a sizeable chunk of money on FTX.

Meanwhile, @depression2019 brushed aside the possible legal implications, justifying the action as necessary to bypass the lengthy bankruptcy process only to get a small percentage back, if at all.

Algod a clown but if I got 8 figs stuck on ftx I’m probably doing the same lolWould rather have the money in my hands and then fight whatever after, over it being stuck with ftx for 5 years thru bankruptcy for the 1% chance I see any of it— depression BTC (@depression2019) November 11, 2022

Similarly, “lawyer by day” @wassielawyer said, given the complicated mess of the FTX bankruptcy, any legal ramifications “will take a few years” to catch up. He added that this is not legal or financial advice.

“Will take a few years for people to even consider pursuing you given what a dumpster fire this is.“

However, others took a different view. @ThinkingUSD saw this as a black-and-white matter, calling such actions straight-up financial crime.

Just a heads up if you’re doing this, or thinking of doing this you’re committing financial crimes. Good luck. — Flood (@ThinkingUSD) November 11, 2022

Samuel is a strong believer in individual autonomy and personal freedom. He is a relative newcomer to the world of cryptocurrency, having first bought Bitcoin in early 2017, but keen to make up for the lost time.

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