Australian investors have been unable to withdraw their funds after the spectacular collapse this week of cryptocurrency exchange FTX.
- High-profile cryptocurrency exchange FTX crashed this week
- Australian investors have been unable to withdraw funds from the platform
- The local arm of FTX went into voluntary administration on Friday
The company’s Australian entities have now entered voluntary administration and clients have been warned not to deposit funds or trade on the platform.
One of the largest exchanges in the world, FTX’s downward spiral this week has been dramatic even by the standards of the notoriously treacherous cryptocurrency industry.
Its high profile is due in part to the shaggy celebrity of founder Sam Bankman-Fried, as well as its sponsorship of events like the Men’s T20 World Cup, currently being played in Australia, and stunts like buying the naming rights to Miami. Heat. stadium.
But recent developments have eliminated
Last week, cryptocurrency news outlet CoinDesk reported on a leaked financial document that claimed that Bankman-Fried trading firm Alameda Research was backed by a significant amount of a cryptocurrency known as FTT, sold by its own exchange FTX. .
The founder of rival exchange Binance, Changpeng Zhao, who has denied any involvement in the “master plan” in the crash, he later announced that his company would sell its FTT tokens.
This triggered the equivalent of a bank run and investors walked out, reportedly leaving FTX to the tune of over $6 billion within 72 hours.
As FTX began to collapse, Mr. Zhao announced that his own company had entered into an agreement to purchase FTX.com, the non-US arm of FTX. But on Thursday he announced that the deal was no longer on the table.
binance later posted on Twitter that the acquisition would not go ahead due to “corporate due diligence”, putting FTX investor money at risk.
Lisa Wade, CEO of investment firm DigitalX, said her team had sold the company’s FTT token holdings earlier this week after seeing some worrying signs about the Bankman-Fried empire.
At this point, she sees the story as the downfall of a young entrepreneur who began “believing his own hype”.
“If I picked one person who was the market favorite, it would be him,” he said, referring to Bankman-Fried.
“I would call it a ‘Madoff moment’ rather than a ‘Lehman [Brothers]’ moment.
“Young entrepreneurs have blind spots and they blow up their startups every day.”
Australian investors in the dark
Australians who have money tied up in the exchange have told ABC that their situation appears unstable.
A red banner at the top of the website on Friday told customers that the site could not process withdrawals and “strongly” discouraged depositing.
An investor in Melbourne said he had tried to withdraw a small amount of another cryptocurrency called AVAX from FTX earlier this week, but was told the transaction would take 24 hours. Never arrived.
Iggy, a Perth merchant, said he could see his balance of around $50,000 on the site, but couldn’t get it out.
“It’s a good amount of money that I can’t access right now,” he said.
“As a trader, I’m just walking away from it, writing it off.
“But for someone else, this would be the end for them.”
In Australia, the company operates under the umbrella of FTX Express Pty Ltd and FTX Australia Pty Ltd, which are now under voluntary administration. Australia’s financial regulator ASIC is also monitoring the situation.
There are reports that the Department of Justice and the United States Securities and Exchange Commission are also looking at FTX.
It’s unclear when, or even if, Australians with money tied up in the Bankman-Fried deals will be able to get their money back.
It’s just the latest in a series of problems for locals looking to put money into crypto markets: Australians who had money invested in so-called cryptocurrency “bank” Celsius, which went bust in July, are still waiting in a court of law. US bankruptcies to find out if they will be able to recover any assets.
In a lengthy Twitter thread on Friday, Bankman-Fried tweeted an apology to FTX customers.
But his options seem limited unless another company steps up to rescue him.
CyberX’s Ms. Wade said at this time that she didn’t think customers would get their money back.
“I don’t rule out someone saving the day… If I had a lot of money, there are a lot of people you can help, there are a lot of clients.”
Iggy said that he had been trading on FTX for about six months, but the situation had now made him think twice about trading cryptocurrencies.
“We have put our funds into a company that we thought we had done due diligence for,” he said.
“There should be some sort of oversight to ensure Australian investors are protected.
“You can make money in the meantime, but will you be able to access the money whenever you want?
“It seems like no one is really safe. If your bitcoin isn’t in your own wallet, it doesn’t belong to you.”
ABC attempted to contact one of the local directors listed in its business documents through LinkedIn, but the man appeared to have deleted his account on Friday.
Questions sent to FTX went unanswered.