Thousands of Alabamians lose money in FTX bankruptcy

Published: Jan. 5, 2023 at 6:17 AM CST
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MONTGOMERY, Ala. (WSFA) - The Alabama Securities Commission is warning Alabamians not to get “fin-fluenced” or financially influenced on social media.

The commission regulates any company consumers deposit money into, like PayPal. There are some requirements companies must meet to do business in Alabama, but bankruptcy violates those.

Four major cryptocurrency companies have filed for bankruptcy: Celsius, Voyager Blockfy, and the more popular FTX.

“I think these companies have managed to continue operations because, like many ventures, people learn about what other people are investing in and they get excited and they see their friends’ making returns,” said Amanda Senn, deputy director of the commission.

But those returns aren’t promised, according to Senn. Cryptocurrencies aren’t insured the way traditional currency is.

“Based on the documents that we’ve received, thousands of Alabamians have accounts with these now bankrupt crypto companies,” she said.

The state officially ended money transmissions with bankrupt companies. Alabamian’s money is now in limbo.

“It’s hopeful that some Alabamians will get at least a portion of their investment back, there’s always the possibility that some of these firms can be bought in bankruptcy,” said Senn. “And that may be more beneficial to the investors.”

Senn says, in the meantime, don’t invest what you can’t afford to lose.

“Digital assets are actually just an entry on a ledger. And they’re only really worth what another investor is willing to pay for it that day,” she said.

While states like Alabama do regulate cryptocurrency companies, the federal government doesn’t.

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