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FTX fallout continues to spread, hitting Hong Kong and US exchanges as bitcoin and ether prices rally

  • Crypto firms OSL and Amber have cut costs and Genesis is on the verge of bankruptcy, while the US arrested the co-founder of Hong Kong-based Bitzlato
  • Bitcoin pushed past US$20,000 for the first time in two months after a 15 per cent rally in the past week, and ether is up 10 per cent

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A screen showing the price of various cryptocurrencies against US Dollars in Hong Kong on December 21, 2022. Bitcoin has rallied by more than 15 per cent in the past week, surpassing US$20,000 for the first time in two months. Photo: Bloomberg
Xinmei Shen

As bitcoin and ether prices soared this week, damages from the cryptocurrency market meltdown triggered by the collapse of FTX two months ago have continued to surface, particularly among Hong Kong exchanges as the city seeks to become a hub for virtual assets.

OSL told the Post by email on Wednesday that it is planning to reduce operating expenses by approximately 33 per cent “in response to current market conditions”, a process that includes a headcount reduction, without disclosing the number of employees that will be let go.

OSL is a subsidiary of Hong Kong-listed BC Technology Group, which in December 2020 received the city’s first license to operate a virtual asset trading platform for professional investors.

The company joins trading firm Amber Group, founded in Hong Kong and now headquartered in Singapore, in seeking to control spending. Amber is currently cutting support jobs in IT, risk management and compliance. It made its entire internal audit team redundant, the Post learned, and has been delaying payables to third-party vendors. In another cost-saving move, the company closed its office in Hong Kong’s Central business district for a cheaper location.

Amber was one of just four Web3 companies with funding rounds above US$100 million last quarter, according to Crunchbase data. It raised US$300 million in December in a Series C round led by Shanghai-based Fenbushi Capital. A Series B round led by Singapore’s state-owned Temasek last February raised US$200 million, valuing Amber at US$3 billion at the time.

In more bad news for the city’s crypto industry this week, US authorities announced on Wednesday that they had arrested the majority owner and co-founder of Hong Kong-registered cryptocurrency exchange Bitzlato, which allegedly processed US$700 million in illicit funds in dealings with the dark web marketplace Hydra Market.

The co-founder, Anatoly Legkodymov, is a 40-year-old Russian who helped run the company from just across the mainland China border in Shenzhen, US authorities said. Legkodymov was arrested in Miami earlier this week.

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