Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Monday, Mar 27, 2023

Hong Kong investors in FTX still under cover as founder is arrested in Bahamas

Hong Kong investors in FTX still under cover as founder is arrested in Bahamas

Many smaller institutions have remained silent on their exposure to the collapsed cryptocurrency exchange, as founder is arrested in Bahamas.
One month on from the collapse of former cryptocurrency exchange FTX, institutional investors in Hong Kong remain reluctant to speak out about the collateral damage of the incident as the industry reels from billions in losses across dozens of organisations.

Among the top venture capital firms that invested in the exchange – which was born in Hong Kong – and have disclosed losses, US-based investors appear to have been hit the hardest by the implosion of FTX, which until last month was the world’s second-largest crypto exchange.

Major US firms Sequoia Capital, Tiger Global, BlackRock and cryptocurrency-focused Paradigm, have collectively written down more than US$550 million of investments in FTX, making up more than half of the total venture capital losses made public to date.

On Tuesday, FTX founder Sam Bankman-Fried was arrested in the Bahamas after US prosecutors filed criminal charges, according to a statement from the local government. The charges include wire fraud, securities fraud and money laundering, according to a report by The New York Times.

Singaporean institutions have also been hit hard, with state-owned Temasek Holdings writing down US$275 million and Sea Capital, which participated in an FTX funding round in October last year, losing an undisclosed amount.

Other top institutions that also saw their investment in FTX wiped out include Japan’s SoftBank and Canada’s Ontario Teachers’ Pension Plan.

But many smaller institutions have remained silent on their exposure to the collapsed exchange. Founded in Hong Kong in 2019, FTX has raised a total of US$1.8 billion over seven funding rounds from 39 investors, according to Crunchbase. Its valuation reached US$32 billion in January this year. One of the 39 venture investors in FTX is based in Hong Kong, while one is based in Beijing, according to Crunchbase data, while 26 are from the US.

Hong Kong regulators, which recently announced a push for the city to become a virtual asset centre, said that the city’s exposure to FTX is “immaterial” and that the incident demonstrates the need for careful regulation as opposed to unfettered growth.

Last week, the city’s Legislative Council passed the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, which introduces a licensing regime for virtual asset platforms that will come into effect in June next year.

Several cryptocurrency platforms in Hong Kong, however, have run into various troubles as the FTX contagion spreads.

New Huo Technology, formerly known as Huobi Technology, said last month that it had US$18.1 million stuck with FTX, of which US$13.2 million are customer deposits.

Hong Kong-based Atom Asset Exchange (AAX) has recently shut down after it deleted some of its social media accounts and halted withdrawals, with the executive team incommunicado. While the company cited “acute pressure” from current market conditions, the company’s troubles started before the meltdown of FTX, people familiar with the matter have previously told the Post.

Genesis Block, a cryptocurrency company that allows retail investors to buy bitcoin from its network of ATM machines across Hong Kong, ended trading last month following FTX’s bankruptcy. There have been local media reports of links between Genesis and FTX, but Genesis has made no public announcements on the matter.

Genesis Block’s office in Wan Chai is in the same building as Cottonwood Grove, a Hong Kong-based subsidiary of Alameda Research. Alameda was the sister trading firm of FTX. Genesis Block co-founder Clement Ip was also a director of FTX’s Hong Kong business, according to a report by the Financial Times. The report cited people familiar with Genesis Block’s operations as saying that it is “integrated into FTX and Alameda”.

Cryptocurrency-trading firm Amber Group, which started in Hong Kong and moved its headquarters to Singapore and is also backed by big name investors such as Temasek and Sequoia Capital, has been laying off staff after saying on Twitter that 10 per cent of its total trading capital is stuck with FTX. Amber, however, insists that it is business as usual and that customers can withdraw their funds in the normal manner.

Related Articles

Hong Kong News
In a dramatic U-turn against His Government: Judicial Overhaul Legislation Must Be Halted, Says Israeli Defense Minister Yoav Gallant
Powell: Silicon Valley Bank was an 'outlier'
Bordeaux town hall set on fire in France pro democracy protest
Police violence in Paris
Paris: Some of the police are stepping down and showing solidarity with the protesters.
Donald Trump arrested – Twitter goes wild with doctored pictures
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Goldman Sachs cuts outlook for European bank debt over Credit Suisse crisis
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
The US government has charged Chinese businessman Guo Wengui with leading a $1 billion fraud scheme that cheated thousands of followers out of their money.
Credit Suisse to borrow $54 billion from Swiss central bank
The BBC problem about China
Russian Hackers Preparing New Cyber Assault Against Ukraine
"Will Fly Wherever International Law Allows": US Warns Russia After Drone Incident
If this was in Tehran, Moscow or Hong Kong
Announcing GPT-4
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
China is calling out the US, UK, and Australia on their submarine pact, claiming they are going further down a dangerous road
A brief banking situation report
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
'No relation to the American SVB': India's SVC Bank acts to calm depositors amid brand name confusion.
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
Saudi Arabia has announced a major breakthrough in diplomacy with Iran after two years of intense talks
Elon Musk Is Planning To Build A Town In Texas For His Employees
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Fitness scam
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
A primitive judge in Australia sparked outrage when he told a breastfeeding woman to leave his courtroom for being “a distraction"
Barcelona is feeling the heat as they face corruption charges over payments to former vice-president of Spain's referees' committee, Jose Maria Enriquez Negreira
Banking regulators close SVB, the largest bank failure since the financial crisis
Silicon Valley Bank: Struggles Threaten Tech Startup Ecosystem"
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Old clip of Bill Gates saying Ukraine is a big, fat, corrupt sinkhole is going viral
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
2 universities in Hong Kong embrace use of ChatGPT, other AI tools
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
Missing Chinese banker was working to set up Singapore family office
Hong Kong ditches Covid mask mandate after 945 days
Xi Jinping and His Wife Meet with Cambodian King Norodom Sihamoni and Queen Mother Norodom Monineath Sihanouk
How do stolen goods end up on Amazon, eBay and Facebook Marketplace?
It's the question on everyone's lips: could a four-day workweek be the future of employment?
Is Gold the Ultimate Safe Haven Asset in Times of Uncertainty?
Spain officials quit over trains that were too wide for tunnels...
Hello. Here is our news digest from London.