The Australian arms of the crumbling cryptocurrency empire FTX have been placed under voluntary administration.
KordaMentha Restructuring’s Scott Langdon, John Mouawad and Rahul Goyal took over as managers of Sydney-based cryptocurrency firms FTX Australia Pty Ltd and subsidiary FTX Express Pty Ltd on Friday after a board meeting earlier today decided to put the companies into voluntary governance. place.
Sam Blankman-Fried’s crypto empire, previously valued at $32 billion (A$48 billion), collapsed this week after market leader Binance withdrew a takeover bid after executing thee zeal for the company, saying, “Our hope was to be able to support FTX’s customers in providing liquidity, but the issues are beyond our control or ability to help.”
As a result of company investigations, as well as the latest news reports of mishandled customer funds and alleged investigations by US agencies, we have decided that we will not review the potential acquisition of https://t.co/FQ3MIG381f.
— Binance (@binance) Nov 9, 2022
FTX stopped withdrawing crypto and fiat from its exchange this week as clients tried to earn their money back after a Coindesk Analysis that suggested Bankman-Fried affiliated trading platform Alameda Research has gone out of business. The problem is that the value in both companies depended on the other.
The 30-year-old FTX CEO — one critic called him Sam Bankrun-Fraud — has been accused of running a Ponzi scheme where he used investor money in FTX to support his other company, Alameda Research, with the most value in both companies was based on the FTX’s own cryptocurrency, FFX.
The Coindesk story led to a massive liquidation of FTT, creating a liquidity crisis for FTX.
The Wall Street Journal reports that FTX has loaned billions of dollars in customer assets to Alameda Research, which reportedly owes FTX about $10 billion.
As a result, FTX is believed to have a capital shortfall of up to US$8 billion.
The Information has since revealed a complex relationship between Bankman-Fried and his venture capital investors, with the crypto boss turning around and pouring an estimated US$500 million into the VCs, including Sequoia Capital, as a limited partner.
The downfall started with the collapse in the wake of the TerraLuna stablecoin crash in May, which led to the demise of Three Arrows Capital and Bankman-Fried’s intervention of US$1 billion in loans and equity to rescue B.lockFi and Voyager Digital.
US regulators are now circling Bankman-Fried’s smoldering empire, alongside further legal action.
Bankman-Fried took to Twitter to apologize, saying he “blew it and should have done better”.
1) I’m sorry. That’s the biggest.
I screwed up, and should have done better.
— SBF (@SBF_FTX) Nov 10, 2022
In a 22-post thread, he said the issues are related to FTX’s international arm and that US business is fine.
“FTX US, the US-based exchange that accepts Americans, was not financially affected by this shit show,” he wrote.
He also said that Alameda will stop trading on FTX.
15) First, Alameda Research is ending trading somehow.
They don’t do any of the weird stuff I see on Twitter — and nothing big at all. And somehow they will soon stop trading on FTX.
— SBF (@SBF_FTX) Nov 10, 2022
In Australia, KordaMentha said they are now examining the crypto exchange’s books to see if there are enough assets to repay local customers and that they have been in touch with the company’s regulator, the Australian Securities and Investments Commission.
Bankman-Fried is one of the three directors of FTX Australia. The local arm had five employees.
Administrator Scott Langdon said all customers of FTX Express and FTX Australia are requested not to deposit or transact until further notice.
“We are working with the directors to confirm the status quo and will report to all stakeholders,” he said.
“We appreciate the uncertainty this creates for FTX customers and will report to all customers urgently.”
Meanwhile, in the Bahamas, where FTX is registered, the Securities Commission there has frozen FTX Digital Markets’ assets and is now looking for a liquidator.
Australia does not yet have custody rules for digital assets that would require local traders to keep the assets ashore.