Another FTX-Backed Crypto Exchange Suspends Withdrawals and More Could Follow

15 November 2022, 19:11 GMT+0000
Updated by Ali M.
16 November 2022, 11:53 GMT+0000
In Brief
  • Crypto exchange Liquid suspended withdrawals of both fiat and cryptocurrency, citing FTX’s bankruptcy proceedings.
  • FTX’s deep integration into the cryptocurrency industry is having cascading effects on associated platforms.
  • In addition to exchanges suspending withdrawals, FTX-affiliated funds have reported losing capital, while previous deals are falling through.
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Cryptocurrency exchange Liquid has become the latest platform affected by the FTX collapse, with several other reporting struggles.

Liquid suspended withdrawals of both fiat and cryptocurrency, according to a post on its Twitter page. The exchange did so in order to comply with the requirements of bankruptcy proceedings of FTX.

Sam Bankman-Fried’s firm had acquired Liquid Group earlier this year, after offering it a $120 million loan. Liquid suggested that users withhold depositing both fiat and crypto on the platform until further notice.

Following the sudden onset of a liquidity crunch last week, FTX filed for bankruptcy amid a flurry of customer withdrawals. Founder Bankman-Fried was forced to resign as chief executive but had deeply integrated his firm into the cryptocurrency industry. Having invested or funded a slew of platforms and projects, the collapse of his empire already has resounding effects.

Affected by FTX

Binance CEO Changpeng had said as much last week, hours after FTX officially petitioned for bankruptcy. Speaking at a conference in Indonesia, he likened the fall to the start of the 2008 financial crisis.

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That same day, crypto lending firm BlockFi said it would have to temporarily halt withdrawals, fearing a major liquidation event. Later, Ren Labs announced that funding it had been receiving from Bankman-Fried’s Alameda would be discontinued, jeopardizing its operations.

Now, in addition to Liquid, several other platforms are revealing their struggles, either directly or indirectly in relation to FTX.

For instance, cryptocurrency exchange AAX suspended withdrawals, citing a glitch it attributed to the failure of a third-party lender. AAX vice president Ben Caselin said:

“The FTX situation has put immense pressure on exchanges everywhere with users nervous about exchange holdings.”

Meanwhile, the head of the digital asset manager Ikigai Travis Kling came forward to his investors, admitting close ties with FTX. He said a large majority of the hedge fund’s total assets had been on the exchange.

Upon attempting to withdraw on Monday morning, Kling said the fund managed to recover very little. Kling took full responsibility for the mistake and said the fund would continue to trade what assets it had left. He concluded by saying the fund would hope for a recovery with other FTX customers in the coming weeks and months.

Deals falling through

While exchanges related to FTX have suspended withdrawals and connected funds have lost their capital, deals with acquired companies are also falling through.

For example, FTX reportedly acquired Canadian crypto trading platform Bitvo Inc. earlier this year. 

In light of FTX’s collapse, shareholder Pateno Payments Inc. terminated its agreement with FTX Canada Inc. and FTX Trading Ltd. In spite of the acquisition agreement, Bitvo claimed to have no material exposure to FTX or its affiliates.

Earlier, BeInCrypto reported the demise of sponsorship deals FTX had made with star athletes like Tom Brady and Steph Curry. Similar deals for the naming rights of sports stadiums were also terminated by partners.

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Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.