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FTX’s lingering ties remind Hong Kong of the bullet it dodged and risks ahead to regain edge as Asia’s digital hub
- After leaving Hong Kong for the Bahamas, FTX and Alameda Research still had operations in Hong Kong and staff travelling between the two locations
- Investors who passed on FTX years ago now say they dodged a bullet and that Hong Kong’s conservative regulatory approach is vindicated
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Ten days before his fall from grace in the collapse of the world’s second-largest cryptocurrency exchange, Sam Bankman-Fried was enjoying the limelight in Hong Kong.
Speaking by video from the Bahamas, the 30-year-old founder of FTX – valued then at US$32 billion – expounded on “how new technologies are supporting financial inclusion”, playing to a gallery of financial regulators who were lining up at 2022 Hong Kong FinTech Week to hear how disruptive technology could lead to the betterment of society.
Two days after the 35-minute interview with SBF, as Bankman-Fried is known in the crypto world, a report by Coindesk on a leaked FTX balance sheet revealed that the company’s largest asset was FTT, its own token. That set in motion a series of events that led to a run on FTX, exposed alleged fraud and mismanagement and ended in bankruptcy on November 11, marking one of the fastest implosions in global corporate history.
As liquidators pick through the aftermath of FTX, several global venture capital funds – including SoftBank, Sequoia Capital and the Ontario Teacher’s Pension Plan – wrote off their investments in the exchange. Singapore’s sovereign wealth fund Temasek wrote off US$275 million, possibly losing one of its largest bets in a single investment.
Hong Kong so far appeared to have dodged the bullet. Local investors speaking with the South China Morning Post said they either passed on, or missed, opportunities to invest in FTX and its related derivatives trading firm Alameda Research. The Securities and Futures Commission (SFC) previously said Hong Kong’s exposure to FTX was “immaterial.”
Xinmei Shen joined the Post in 2017 and is a technology reporter. She covers content, entertainment, social media and internet culture. Previously, she was with the Post’s tech news site, Abacus. Before that, she was a reporting intern at The Information whilst studying at the University of Hong Kong.
Matt joined the Post in 2019 after covering technology trends in Shenzhen for more than three years. He previously covered business and technology for publications including The Arizona Republic, Phoenix Business Journal, and Reuters. Matt has a master's degree in business journalism and a bachelor's in economics.
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