Here’s How Some FTX Account Holders Can Get Their Money Back – But Time Is Running Out
Some FTX account holders can get their investments back, but they will have to act fast, according to Joshua Browder, CEO of DoNotPay, a chatbox that offers legal advice.
The entrepreneur told CoinDesk TV’s “First Mover” program on Friday that users can get the money back if they file a “Schedule E” tax form with their bank, but only if their accounts were funded by an ACH direct deposit or credit card in the past 60 days.
ACH transactions, or Automated Clearing House network, is an electronic bank-to-bank payment method. DoNotPay is offering the exchange’s account holders a way to get back their funds free of charge in part because it received an investment from FTX several months ago.
San Francisco-based DoNotPay was valued at $210 million in its latest funding round in August, which included backing from Sam Bankman-Fried, FTX's now-disgraced founder. Browder said that he feels “ashamed” to have taken FTX’s money.
“It goes against our mission to have these people involved,” Browder said. “That’s why we want to make it right [and why] it’s free for anyone who needs help reversing their bank transfers.”
Last week, FTX filed for bankruptcy in Delaware after its business collapsed following a CoinDesk report on Nov. 2 that raised questions about the backing of Alameda Research, a trading firm affiliated with FTX that was also founded by Bankman-Fried.
Browder’s startup previously helped users recover funds after crypto lending platform Celsius Network filed for bankruptcy in July.
How the refund works
“It [Schedule E forms] requires banks to reverse ACH transactions in the case of unauthorized transfers,” Browder said. “If you funded your account with direct deposit, you can go to your bank and say ‘I want to reverse the ACH transfer.’”
Browder added that the Schedule E form implies that banks will issue the transaction without “any judgment,” noting that in the case of FTX, “money will actually come from FTX as a payment processor.” A similar process applies to users who bought FTX-based gift cards.
Though some may argue that crypto was created as a way to move away from ACH and credit cards, Browder said leaning on one centralized player, such as a bank instead of FTX, is the better approach.
“You might as well go with the people that can protect you,” Browder said.