Like rats fleeing a sinking ship . . . 

FTX Group has filed for Chapter 11 bankruptcy in the US. That could mean clients are pushed to the back of the line as unsecured lenders — unless they are among the accounts that seem to have circumvented the asset freeze to withdraw money in the past day.

The group’s filing will include around 130 FTX subsidiaries out of the firm’s massive org chart. The Bahamas’ securities regulator announced Thursday it would freeze FTX’s assets, and FTX’s international exchange has had withdrawals frozen since Tuesday.

But there have been plenty of rumours about accounts using workarounds to get their cash out of FTX, before they’re forced to compete with other lenders for whatever is left over.

And what do you know? One account was withdrawing millions of Tether from FTX in public blockchain transactions until about seven hours ago! And it did so with an account that has interacted with Coinbase, which is a publicly traded US company with pretty robust “know your customer” regulations. Seems like a rather questionable strategy legally, given everything that’s happening, but who knows!

Another interesting note: Some folks on Discord have been offering to buy users’ FTX accounts for cents on the dollar. Some larger Twitter accounts also publicly broadcast their requests to buy users’ accounts.

Is this the democratisation of distressed investing? Or a decentralised rug pull?

UponlyTV’s Cobie has a nice round-up of how it could have worked. And hey, there’s some good news for the digitised-beanie-baby set — looks like FTX’s NFT marketplace stayed unfrozen for a while, which could have allowed users to get money out:

This appears to be the first recorded case of NFT utility in existence ????

— Cobie (@cobie) November 11, 2022