November 16, 2022

Crypto Firms’ Millions Stuck due to FTX Collapse

FTX Collapse

FTX Collapse

The collapse of the FTX crypto exchange still has continuous ramifications with reports about the stuckness of large funds of three crypto funds on FTX.

From November 11 to 14, three crypto firms announced massive losses due to the FTX collapse. These firms are Galois Capital, New Huo Technology, and Nestcoin. The three firms’ losses are estimated at more than $68.1 million, according to Cointelegraph.

On November 11, Galois Capital, a crypto hedge fund, revealed that it has a remarkable fund stuck on FTX. The Financial Times on the next day reported that about $50 million of Galois Capital’s assets are stuck on FTX.

On November 14, New Huo Technology’s subsidiary, the Hong Kong-headquartered digital asset platform Hbit Limited, failed to withdraw cryptocurrency worth $18.1 million from FTX that suspended the withdrawal processes.

It is worth mentioning that $13.2 million of the stuck amount are digital assets owned by Hbit users, while the remaining $4.9 million belong to Hbit. However, the firm’s board said its stuck assets on FTX do not affect New Huo Technology’s normal business operations because Hbit is legally separated from the rest of its companies.

New Huo Technology reached an unsecured non-interest-bearing loan agreement worth $14 million with Leon Lin, the founder and ex-CEO of the Huobi exchange, to cover client asset liability. Till now, the company does not know whether it could withdraw its stuck assets or not from FTX.

Moreover, Nestcoin, a Nigerian Web 3.0 startup, announced its failure to withdraw its stuck assets on FTX due to its bankruptcy, Nestcoin CEO Yele Bademosi tweeted on November 14, saying the company lay off some employees because the one-year-old start-up has no funds to pay them.

The collapse of Sam Bankman-Fried’s crypto empire, FTX, which has already filed for bankruptcy has affected a large number of people and companies which have seen losses of amounts of cash and digital assets.

It has also negatively impacted the cryptocurrency market, as the price of cryptocurrencies plummeted at the news of the collapse. Bitcoin fell below $20,000 since the beginning of this month to reach the $16,000 mark. Ethereum dropped under the $1,500 mark to $1,200.

The prices of crypto are expected to end up plunging below $10,000 before the end of the year, due to concerns from investors.

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