Several major cryptocurrency-based firms have reportedly seen their fortunes and capital marooned on the disgraced FTX exchange, with three revealing massive losses in funding.
News from Galois Capital, Nestcoin, and New Huo Technology has triggered layoffs amid the ongoing FTX scandal, where the Bahamas-based company filed for Chapter 11 bankruptcy last week.
For the record, yes we did have significant funds stuck on FTX. No, we did not use any Bahamian method to move funds out.
— Galois Capital (@Galois_Capital) November 11, 2022
Galois Capital stated it had “significant funds” on the FTX exchange, which reports speculate could total up to $50 million in assets.
Nestcoin, a Nigeria-based web3 enterprise, stated it would have to lay off workers due to the aftermath of the FTX scandal. The company’s chief executive, Yele Bademosi, tweeted on Monday a letter detailing it could not receive funds from the bankrupt crypto exchange, leading to the mass layoffs.
It stated that, due to maintaining its assets on the FTX platform to “manage our operational expenses,” it could no longer pay its staff.
An update shared with our investors earlier today on the FTX incident and its impact on @Nestcoin. pic.twitter.com/0Mjo4SYF7R
— YB (25,25) ⏳ (@YeleBademosi) November 14, 2022
Hong Kong-based New Huo Technology, which owns cryptocurrency exchange Hbit Limited, also revealed on 14 November it could not withdraw $18.1 million USD of funds before FTX halted transactions.
According to Hbit, it would work to withdraw cryptocurrency holdings for its users “as soon as possible” but may not be able to withdraw them from the FTX exchange due to its bankruptcy proceedings.
Reports show that roughly $18.1 million in digital assets were on the FTX exchange. Huobi founder Li Lin stated he would provide around $14 million in loans to Hbit to process withdrawals.
Binance Scandal Erupts
The news comes after FTX filed for bankruptcy on 11 November, with its nearly 130 FTX Group entities such as Alameda Research and FTX.US facing the fallout of its liquidity collapse. The incident blocked users from receiving their holdings, with many losing critical life savings invested on the platform.
Binance and FTX entered a non-binding letter of intent for the latter to purchase the former, but Binance CEO Changpeng Zhao (CZ) later backed out of the deal, citing major compliance issues with FTX
