FTX Creditor ‘Champion’ Advises SBF’s Victims to Avoid Gambling on Solana Meme Coins

About $1.2 billion in customer assets trapped in FTX’s high-profile collapse finally began trickling back to creditors on Tuesday after 27 months of uncertainty and waiting, when the former crypto exchange’s bankruptcy estate sent out its first batch of repayments.

For those that lost less than $50,000 when FTX’s swift demise rocked the crypto market in November 2022, the moment represented a long-due reprieve.

The repayments may offer some former customers a sense of closure, but according to Sunil Kavuri—an advocate and self-described “champion” for FTX creditors—the process is just getting started.

Kavuri told Decrypt that FTX’s bankruptcy estate still holds more than $16 billion in assets, which will go to repaying creditors with claims worth more than $50,000 at a later date.

Kavuri is among those that will have to wait longer. The advocate, who has built a following around FTX’s corpse by helping former customers recoup their assets, lost $2 million in the exchange’s collapse himself.

“It became my mission to maximize the recovery for FTX creditors [and] to support them through this depressing and dark time,” he said. “People on Crypto Twitter generally thought that [creditors] literally would get zero back.”

At that point, the pandemic-era bull run had already faded. Bitcoin’s price was around $16,500, while Ethereum and Solana respectively were changing hands at around $1,250 and $16.

Kavuri has been with FTX creditors every step of the way, between hours of bankruptcy hearings and a historic bull run marked by institutional adoption and regulatory shifts.

Now that some FTX creditors are no longer sidelined, Kavuri fears many of Bankman-Fried’s victims will take on exorbitant risks to make up for lost time. He’s warned customers to steer clear of the meme coin trenches and guard their wealth carefully, pointing to Solana meme coins like TRUMP and LIBRA as examples of high-profile gambles that have burned some traders in recent weeks.

“You missed the bull run, but don’t gamble your money away,” said Kavuri, in recalling advice for FTX creditors. “I’ve been posting a lot about being careful with FTX repayments.”

Kavuri was in the courtroom when a New York federal judge sentenced Bankman-Fried to 25 years in prison last March. The stiff sentence followed the one-time wunderkind’s trial, in which federal prosecutors argued that he secretly tapped $8 billion in customer funds as a personal piggy bank.

The case exposed how FTX customer funds were leveraged to finance political donations, a panoply of venture investments, and luxury real estate in the Bahamas. 

It took a Manhattan jury less than a handful of hours to determine that the disgraced wunderkind was guilty of seven counts of fraud, money laundering, and conspiracy. Bankman-Fried, who maintains his innocence, is pursuing an appeal from the Metropolitan Detention Center in Brooklyn, New York.

Tuesday’s distributions are being facilitated by the crypto exchange Kraken and custodian services provider BitGo. Along the way, however, many people sold their claims to investment firms that specialize in buying bankruptcy claims.

Among the claims that were set to be repaid on Tuesday, nearly half had been purchased by investment firms, Kavuri said. He does not blame the creditors for wanting to absolve themselves of an arduous process early.

“Some have sold because of the emotional distress,” Kavuri said, adding that some buyers of FTX claims purchased them for as cheap as 10 cents on the dollar.

Kavuri remembers feeling a sense of total helplessness as Bankman-Fried’s crypto empire crumbled over two years ago. Helping set up a community, along with kind messages from followers, helped him pull through a tough situation, he said.

“I was no longer helpless and alone,” he said. “I’ve heard of at least three suicides and multiple people that went to hospital with panic attacks, or are now taking medication for depression.”

Lately, Kavuri has spent a lot of time online clarifying how the bankruptcy process will play out. And while Kavuri is worried about what FTX creditors may do with their returned money, he hopes that they’ll be better off than they were over two years ago. 

“I see a lot of the influencer posts that are literally begging for the FTX repayments to save their bags,” he said. “I’ve been advocating: This is your money. You waited for two and a half years in the void, don’t lose it all chasing a dream.”

Edited by James Rubin