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FTX’s assets frozen by regulators as probes begin

Published Fri, Nov 11, 2022 · 04:55 PM

EMBATTLED crypto exchange FTX has had its assets frozen as regulators begin their probe.

Sam Bankman-Fried, founder of FTX, is being investigated by the US Securities and Exchange Commission for potential violations of securities rules. The authority froze assets of FTX Digital Markets, an FTX subsidiary.

The Bahamas, where FTX.com is based, froze the assets of a local trading subsidiary and “related parties” on Nov 10. The Bahamas Securities Commission is seeking to place FTX.com into receivership, and has appointed an attorney as a provisional liquidator.

Bankman-Fried is also shutting down Alameda Research, the trading house at the heart of his digital-asset empire.

FTX US has resumed withdrawals for customers after two days on Nov 10, while FTX.com withdrawals remain closed. Trading may be halted in a few days on FTX US, which is a separate legal entity from FTX.com.

FTX is scrambling to raise about US$9.4 billion from investors and rivals, a source said on Nov 11, as the exchange urgently seeks to save itself after a rush of customer withdrawals. Bankman-Fried has warned of bankruptcy if he cannot secure capital to cover the shortfall.

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Other crypto players have been impacted by FTX’s implosion, with crypto lender BlockFi pausing withdrawals, citing “a lack of clarity” on the status of FTX.com, FTX and Alameda Research. The company said it is limiting platform activity, and asked customers not to deposit funds at this time.

Hodlnaut, a Singapore-based crypto lender currently under judicial management, has also been impacted by FTX. About 72 per cent of digital assets deployed by Hodlnaut on centralised exchanges were held with FTX, with an estimated market value of S$18.5 million, its interim judicial managers said. The extent of the recovery of those digital assets is currently uncertain, they added.

FTX investors have marked their investments to zero, with Softbank being the latest to do so. Earlier, Sequoia Capital had informed its investors that its FTX investment was marked to zero. The total investment of SoftBank’s Vision Fund in the US and international operations of FTX is less than US$100 million, a source close to SoftBank said on Friday (Dec 11). The Japanese tech investor is marking down its FTX investments to zero, the source added.

Bitcoin tumbled 4 per cent to US$16,858 on Friday, with losses totalling 17 per cent this month. FTX’s token FTT was down 27 per cent at US$2.7, with 89 per cent losses for the month. BLOOMBERG, REUTERS

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