(Bloomberg) -- In Japan, the logo spelling F-T-X was plastered on a billboard next to the face of star baseball player Shohei Ohtani.
In China, social media influencers peppered followers with sponsored posts pointing them to the platform and its frizzy-haired founder. In late October, just days before FTX's spectacular collapse, Sam Bankman-Fried himself spoke at a Hong Kong conference organized by the local government.
Like in the US, legions of people in East Asia were drawn to Bankman-Fried's righteous nerd-of-the-people veneer. SBF had been a trader himself, some reasoned. He had the textbook look and feel of a tech genius. What's more, signing up for FTX was much easier than many other platforms.
Thousands from Seoul to Singapore are now living with the consequences of trusting him.
A woman in Hong Kong, once a crypto skeptic, got an FTX account after her then-boyfriend posed a rhetorical question: Do you want to be right, or do you want to be rich? She says she has $20,000 stuck there, half of which belongs to her mom.
A tech industry worker in southwestern China is out $42,000. About 1,000 miles east, in the Zhejiang province, a woman is looking at a loss that's more than 10 times as large, including almost all of her family's savings.
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Lately, they've gone from denial to distress to befuddlement. How could something that seemed safe just crumble like a house of cards? Surely they'll get at least some of their money back. It can't just be gone. Can it?
FTX lacked official approvals to operate local exchanges in countries including Singapore, South Korea and China. This broadly means that people there could open accounts on the platform as long as FTX let them, but that local regulators hadn't scrutinized it to reasonably ensure it operated in a legitimate way.
Still, people flocked to FTX. It allowed many to trade a wider range of digital currencies and derivatives than they could on licensed exchanges. And some FTX users told Bloomberg the platform's checks to let them open an account were far looser than elsewhere.
FTX didn't respond to a request for comment.
Half a World Away
FTX is now in the early stages of what's likely to be a prolonged bankruptcy with a sprawling network of creditors and users all jostling to recoup whatever money is left. Lawyers in China and South Korea and beyond are contacting victims and gearing up to file class action lawsuits.
One thing is certain: It likely will take a long time before FTX's overseas users see any money. And such payouts are far from guaranteed, even for those who choose to sue.
“It will be very challenging and time consuming with legal actions, which could take three to five years,” said Liu Honglin, an attorney at Man Kun Law Firm. He says he oversees a WeChat group with more than 100 Chinese users who collectively have more than $30 million on the platform.
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It's not clear how many users there are in the region. FTX has said it had about 1.2 million in the US at the end of 2021, and more than 5 million globally. Recent bankruptcy filings haven't included specific figures, and the turnaround specialist now leading the company has slammed its “complete absence of trustworthy financial information.”
However, court records and website traffic indicate that a considerable number of the users are in East Asia, half a world away from FTX's Caribbean headquarters.
In Japan — one of the first hubs for cryptocurrencies — thousands of people had their wallets fall under FTX's custody when it bought a Tokyo-based exchange earlier this year. FTX's Japanese subsidiary recently said it's developing a plan to let its customers withdraw their funds following the collapse of the parent company. Its assets are managed independently and shouldn't be impacted by the legal proceedings in the US, local media reported, though it's unclear whether the plan will work out.
Read more: ‘It's All Gone': FTX Bankruptcy Is Worst Fear for Retail Traders
In Taiwan, some chose FTX because the platform and its founders seemed more trustworthy than exchanges controlled by entrepreneurs or investors with roots in mainland China. Crypto transactions were banned in mainland China last year, so offshore platforms like FTX offered a way for some citizens to bend the rules and keep trading.
Sleepless Nights
Bloomberg News spoke to several FTX users, who asked to not be identified because they're embarrassed about their losses and, for those in China, fear that they may face legal trouble over their investments on the platform.
One of them, a 37-year-old woman in China's Zhejiang province, began piling money into an FTX account a few years ago after she lost trust in the government. She remembers the platform's convincing marketing campaigns and says she thought it was a bank. A screengrab of her now-frozen account shows a balance about $600,000, part of which she says was invested by family members. Even now, after many sleepless nights, she still hasn't dared to tell them.
Read more: Sam Bankman-Fried's Magic Money Box Enriched Vast Crypto Network
Despite being founded in Hong Kong, FTX wasn't licensed to operate an exchange there. The city's financial regulator has publicly warned that people using unlicensed platforms could lose everything if they close down, get hacked or collapse.
Another user, a 31-year-old woman in Hong Kong who works in finance, says she has $20,000 locked up in FTX. She got weary in early November when the first cracks became apparent. Still, she decided to stay put and take advantage of the high interest rate on tokens she lent to the exchange. After the bankruptcy became public, she says she didn't leave her home for more than a week and recently went to see a therapist. Other FTX users have sought solace in groups on Telegram and WeChat where they jeer in unison at Bankman-Fried's attempts to assure anyone who'll listen that it was all just an honest mistake.
Every other time, Sam has come through, she says she remembered thinking. He won't let me down.
A 32-year-old from southwestern China opened an account in 2020 using just her Gmail address. The platform felt safe, transaction fees were low and there was a 5% interest on deposits. Now she says she's out about $42,000.
It's hard to believe, she says, that money that felt like it was deposited in a bank could just disappear overnight.
--With assistance from , , and .
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