The collapse of the cryptocurrency exchange FTX has had a ripple effect throughout the industry, with several crypto-focused companies reporting significant amounts of capital stuck on the platform.

Three cryptocurrency companies announced large losses between November 11 and 14, with one of them having to lay off workers to deal with the crisis.

Galois Capital, a crypto hedge fund, announced on Nov. 11 that it had "significant funds" stuck on FTX, citing a Nov. 12 Financial Times report that said Galois' assets were potentially worth $50 million.

Other cryptocurrency-focused businesses have reported that their funds are stuck on the now-defunct exchange.

New Huo Technology, the owner of the Hong Kong-based cryptocurrency platform Hbit Limited, announced on November 14 that it was unable to withdraw $18.1 million in cryptocurrency before FTX stopped processing withdrawals.

Hbit users lost $13.2 million in digital assets, with the company saying it would continue to take steps to pull back the cryptocurrency as soon as possible. However, due to FTX's bankruptcy filings, the cryptocurrency may not be able to be withdrawn from the platform.

According to the announcement, Li Lin, the company's majority shareholder and the founder of the Huobi crypto exchange, agreed to lend the company up to $14 million for use in handling withdrawals. However, the corporation still needs to learn the financial consequences of bankruptcy if the funds are never withdrawn.

Nestcoin, a Nigerian Web3 startup, also announced on November 14 that it had failed to withdraw funds from FTX, with the company's CEO, Yele Bademosi, posting a letter posted previously with investors on Twitter.

Previously, CoinGecko, warned on November 13 that layoffs in the crypto sector could rise in the coming months as the "full impact" of FTX's complete collapse takes effect.

On November 11, FTX announced that approximately 130 companies in its Group, including its US entity FTX.US and sister trading firm Alameda Research, would file for bankruptcy in the United States after FTX experienced a liquidity crisis and was not able to process user withdrawals, leaving customers without access to capital held on the exchange.

The assets of its Bahamas-based subsidiary, FTX Digital Markets, were frozen by the local securities regulator on November 10, and liquidators were appointed to safeguard its funds while bankruptcy filings were initiated.

How do you think FTX will recover from this? Drop your comments by sharing this article on social media. 

Nov 16, 2022
Crypto News

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