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Monday, March 27, 2023

Australian Investors in Limbo Following FTX Crypto Exchange Collapse

Australian investors have been unable to withdraw their funds after the spectacular collapse this week of cryptocurrency exchange FTX.

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 Yoshines.

FTX founder Sam Bankman-Fried had become a prominent face in the cryptocurrency industry.(Getty Images: Jeenah Moon/Bloomberg)

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.”

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