FTX bankruptcy freezes millions worth of crypto company funds

November 16, 2022 Coin Telegraph

bankrupt

Galois Capital, New Huo Technology, and Nestcoin are just some of the crypto firms with funds stuck on FTX as the exchange undertakes bankruptcy filings in the United States.

The collapse of the cryptocurrency exchange FTX continues to have knock-on effects throughout the crypto industry with multiple crypto-focused companies reporting significant amounts of their capital stuck on FTX.

Between Nov. 11 to 14 three crypto companies announced large losses with one of them having to lay off workers to deal with the crisis.

On Nov. 11, crypto hedge fund Galois Capital announced it had “significant funds” stuck on FTX, with a Nov. 12 Financial Times report that said a possible $50 million worth of Galois’ assets were stuck on the exchange.

Other crypto-focused companies have reported their funds arestuck on the now-bankrupt exchange.

New Huo Technology, the owner of the Hong Kong-based crypto platform Hbit Limited announced on Nov. 14 it failed to withdraw $18.1 million worth of cryptocurrency before FTX stopped processing withdrawals.

$13.2 million of this loss are digital assets owned by Hbit users with the company saying it would continue to take steps to “withdraw the cryptocurrency as soon as possible,” bit admitted due to FTX’s bankruptcy filings the crypto “may not [be] able to be withdrawn from FTX.”

According to the announcement, Li Lin, the controlling shareholder of the company and founder of the Huobi crypto exchange agreed to loan up to $14 million to the company for it to use in processing withdrawals. However, the company does not yet know what the financial impact of FTX’s bankruptcy will be if it is never able to withdraw the funds.

Nigerian Web3 startup Nestcoin also announced it failed to withdraw funds from FTX with the company’s CEO, Yele Bademosi, posting to Twitter on Nov. 14 a letter previously shared with investors.

The letter detailed that Nestcoin will lay off workers “as we held our assets (cash and stablecoins) at FTX to manage our operational expenses” and it no longer has the funds to pay some staff.

An update shared with our investors earlier today on the FTX incident and its impact on @Nestcoin. pic.twitter.com/0Mjo4SYF7R
— YB (25,25) ⏳ (@YeleBademosi) November 14, 2022

Previously crypto data aggregator platform CoinGecko warned on Nov. 13 that layoffs across the crypto sector could increase in the coming months when the “full impact” of FTX’s sudden collapse takes effect.

On November 11, FTX said roughly 130 companies in its FTX Group including its United States entity FTX.US and sister trading firm Alameda Research declared they would file for bankruptcy in the U.S. after FTX suffered a liquidity crisis and was unable to process user withdrawals, leaving its customers without access to their funds held on the exchange.

Its Bahamas-based subsidiary, FTX Digital Markets had its assets frozen by the local securities regulator on Nov. 10 and liquidators appointed to safeguard its funds while the bankruptcy proceedings are undertaken.

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BitLicensed Crypto Firms Ordered to Pay Annual Assessment Fees in New York

April 19, 2022 Coin Telegraph

assessment fees

The fees will bring virtual currency companies on par with those paid by banking and insurance institutions as a way for the state to recoup operating expense costs and “best support” the industry.

The cost of running a crypto business in New York is about to rise with the state government gearing up to require companies holding a BitLicense to pay assessment fees to ensure they’re complying with regulations.

The rule was included in New York State’s FY2023 budget signed into law on April 9th by Governor Kathy Hochul giving the state's Department Of Financial Services (DFS) a “new authority to collect supervisory costs from licensed virtual currency businesses,” according to a statement by the DFS.

DFS Superintendent Adrienne Harris said the fees would bring virtual currency businesses in line with those already paid by institutions such as banking and insurance companies and added:

“New York was the first to start licensing and supervising virtual currency companies, and we continue to attract more licensees and the most crypto startup funding of any state in the nation.”

The state of New York was the first in the U.S. to require crypto companies to be licensed with the introduction of the now known “BitLicense”, the application fees for such a permit are currently $5,000 and are subject to vague capital requirements determined by the New York DFS.

The annual assessment fee amount that the DFS will charge crypto firms is currently unknown, but the same fees for other regulated financial institutions can cost tens of thousands of dollars a year.

The DFS states the fees are to assist with paying the operating expenses of regulating crypto firms and “will empower the Department to build staff with the capacity and expertise to best regulate and support this rapidly growing industry.”

Businesses that accept crypto as payment, create software for the crypto space such as self-custody wallets, or give advice on crypto trading aren’t subject to the BitLicense and corresponding new fees.

Recently, the regulation and licensing of crypto in the state have come under fire with billionaire investor Bill Ackman sharing his thoughts in February about New York’s failing policies and how it could make him leave the state.

Ackman appealed to Mayor Eric Adams and Governor Hochul to address the increasing concerns around regulation, saying that easing restrictions and removing regulatory barriers could make New York a “crypto center of innovation.”

Mayor Adams ran with plans to make New York City the “center of the cryptocurrency industry” even taking his first three paychecks in Bitcoin (BTC). Analysis from Cointelegraph in November shows that it’s really up to the New York DFS and state government to enact changes that will attract the industry.