The Bahamas securities regulator has frozen the assets of FTX Digital Markets, the Bahamas subsidiary of FTX, the world’s second largest cryptocurrency exchange as it struggles for survival. The commission said that the powers of the directors of FTX Digital Markets have been suspended and no assets of FTX, client assets or trust assets held by FTX, can be transferred, assigned or otherwise dealt with, without the written approval of the provisional liquidator. Moreover, based on their information, the commission said that any actions, related to allegations that FTX customers’ assets were mishandled, mismanaged or transferred without client consent, would have been contrary to normal governance, without client consent, and potentially unlawful.

Hedge fund’s balance sheet loaded with FTT tokens

The regulatory action came after reports that the balance sheet of the crypto hedge fund owned by FTX’s founder, Sam Bankman-Fried was loaded with billions of dollars. This means that any volatility in FTT tokens’ price could endanger Bankman-Fried’s empire. The crisis escalated when Binance, the largest cryptocurrency exchange, announced that it would sell its holdings worth about $500m in FTT citing “recent revelations”. Subsequently, customers tried to withdraw their funds faster than the exchange could process them, which triggered the crypto equivalent of a bank run. FTX has yet to restart withdrawals, is blocking new account signups, and advising existing customers against making deposits with FTX.

Crisis could lead to more crypto industry collapses

This crisis could lead to more crypto industry collapses, and S&P global ratings expects collateral calls and liquidations to accelerate. Confidence has been lost, and there is no sight of it coming back yet, according to Kami Zeng, the head of research at Fore Elite Capital Management, a Hong Kong-based crypto fund manager. On the other hand, Changpeng Zhao, the founder of FTX’s rival Binance, warned of a 2008-style crisis that the crypto market could face in the days to come. The US Department of Justice and the Securities and Exchange Commission are reportedly examining FTX to determine whether any criminal activity or securities offences have been committed. In Australia, FTX’s Australian arm has been put into administration, and FTX’s US platform, which is separate from the international exchange, has warned that trading may be halted in a few days.

Read More Here https://www.theguardian.com/technology/2022/nov/11/ftx-assets-frozen-bahamas-regulator-crypto-exchange-bankman-fried

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For UK crypto investors, this event may lead to a decline in trust and increased hesitancy in the market. It is important to check the credibility of any potential investment opportunities and to choose only reputable institutions and companies to work with.

In summary, while the liquidation of Three Arrows Capital sends shockwaves throughout the crypto industry, it should serve as a lesson for investors to be cautious and diligent when investing in the market.

Read More Here https://news.sky.com/story/crypto-hedge-fund-three-arrows-capital-plunges-into-liquidation-12642402

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