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
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.
Cryptocurrency firm Amber scrambles to slash costs to survive: source
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.
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.
Hydra received the second-largest amount of cryptocurrency from Bitzlato between May 2018 and September 2022, according to the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), followed by the Russia-based Ponzi scheme TheFiniko. The top receiving counterparty listed by FinCEN was Binance, the world’s largest crypto exchange whose founder Zhao Changpeng ran the company from Hong Kong for a time after a crackdown on the industry in mainland China.
The collapse of FTX, which was also founded in Hong Kong before moving to the Bahamas in 2021, has dealt a heavy blow to the crypto industry worldwide. It has also invited regulatory scrutiny in the US, where companies continue to be impacted.
US crypto lending firm Genesis Global Trading, which has struggled since last year as a result of losses from loans to other industry players, is expected to file for bankruptcy within a week, Bloomberg and The Wall Street Journal reported, citing people familiar with the matter.
Consensys, the US-based blockchain software company behind the popular crypto wallet MetaMask, will lay off 11 per cent of its workforce, impacting 96 employees, CEO Joseph Lubin said in a blog post on Wednesday.
As the US weighs new regulations on the industry, Commodity Futures Trading Commission Commissioner Christy Goldsmith Romero warned lawmakers on Wednesday about the dangers of allowing exchanges to “self-certify” the tokens that they list on their platforms. This could lead to “regulatory arbitrage” for products that may qualify as securities, she said in a panel discussion on FTX’s collapse.
Despite some of the negative news this week, the two largest cryptocurrencies by market capitalisation have seen big rallies. Bitcoin surged above US$20,000 this week for the first time in more than two months. In the past seven days, it has risen by more than 15 per cent to around US$20,800, while ether, the token on the Ethereum network, is up by about 10 per cent to around US$1,500, according to CoinGecko.
The jump in bitcoin prices can be attributed to macroeconomic factors and an increase in global liquidity, said Yves Longchamp, head of research at crypto bank SEBA Bank. “It is important to keep an eye on the regulatory landscape and exercise caution in the short term,” he said.
