‘I want my money back’: Emails from desperate Australian FTX customers detailed in court documents

The affidavit from KordaMentha administrator Scott Langdon said they estimated 29,234 separate customers “may have lost significant property” of which the “recoverability and current value is yet to be determined”.

Langdon also said that the voluntary administration of an online trading platform was presenting different challenges to a typical insolvency, as there was a broad range of customers who, in many cases, have spent huge sums purchasing cryptocurrencies.

“It is not unusual in cases such as this that some customers may have only a cursory understanding of the products and/or contracts they entered and, faced with losses outside of their control, react differently to trade creditors who might encounter losses in the usual course of their business,” he said.

“That is reflected in correspondence that we have received from customers where there has been an undertone of expectation that property or funds will be returned promptly, even though this is unlikely to be the case in this complex voluntary administration.”

Because of this, the administrators are going to provide more regular updates to stakeholders than they normally would. They have also asked for more time to convene a first creditors’ meeting.

The financial institutions holding the funds of the two entities have been told not to allow withdrawals, and have been asked to transfer the funds to accounts controlled by the administrators.

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“The administrators are continuing to conduct investigations into the affairs of the companies,” Langdon said.

“We have not yet been able to determine who has the beneficial entitlement to the funds that were held in the bank accounts. We are conscious of the need to preserve these funds until it can be determined as to who is beneficially entitled in circumstances where they may be subject to third-party claims.”

Australia’s corporate regulator suspended the financial services licence of FTX Australia last week. The Australian Securities and Investments Commission said it was monitoring this situation closely and speaking regularly with international regulators and the external administrators.

KordaMentha representatives will fly to New York next week to meet their US counterparts, a spokeswoman for the company said.

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“Representatives of KordaMentha will this week meet with the FTX Group bankruptcy advisers Alvarez & Marsal and Sullivan & Cromwell in New York,” she said.

“Maximising the return for Australian customers and creditors remains our priority. We have empathy for those many thousands of FTX customers in Australia seeking clarity. We hope to have further information following our meeting with the bankruptcy advisers.

“The KordaMentha team has also started the process of responding to the many thousands of customer and creditor inquires we have received. We ask for patience as this is a complex administration process with significant global interactions.”

On Friday, John J. Ray III, FTX group’s new chief executive officer who formerly oversaw the liquidation of Enron, said in his career he had never “seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information”.

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