FTX’s bankruptcy filings in the United States have left funds with crypto firms such as Galois Capital, New Huo Technology, and Nestcoin stuck on the exchange.
Crypto-focused companies reported significant amounts of capital being stuck on FTX following the collapse of FTX, a cryptocurrency exchange.
As a result of the crisis, three crypto companies posted large losses from November 11 to November 14. One of those companies had to lay off workers as a result.
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The Financial Times reported on November 12 that Galois Capital could hold $50 million worth of assets on FTX after the crypto hedge fund announced “significant funds” were stuck on the exchange.
The now-bankrupt exchange has also reported that funds of other crypto-focused companies have been trapped there.
New Huo Technology, the owner of the Hong Kong-based crypto platform Hbit Limited, announced on November 14 it failed to withdraw $18.1 million in cryptocurrency before FTX stopped withdrawals.
FTX shut down the Hong Kong-based crypto platform Hbit Limited on November 14 after New Huo Technology failed to withdraw $18.1 million in cryptocurrency.
FTX’s bankruptcy filings have resulted in the loss of $13.2 million worth of digital assets owned by Hbit users, with the company promising to “withdraw the cryptocurrency as soon as possible” but admitting it may not be possible to withdraw the cryptocurrency from FTX because of the bankruptcy filings.
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The Huobi crypto exchange’s founder and controlling shareholder, Li Lin, agreed to lend a loan to the company for withdrawal processing of up to $14 million. If FTX’s bankruptcy ends with the company unable to withdraw the funds, the company still needs to learn the financial impact.
Nestcoin, a Nigerian Web3 startup, also announced that it could not withdraw funds from FTX. While Yele Bademosi, the company’s CEO, posted a letter to investors earlier this month on Twitter, no action was taken.
According to the letter, Nestcoin will lay off employees since it no longer has the funds to pay some workers because it had held its assets (cash and stablecoins) at FTX.
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
When the “full impact” of FTX’s sudden collapse is felt, layoffs across the crypto sector could increase.
FTX reported on November 11 that 130 companies in its FTX Group will file for bankruptcy in the United States, including FTXUS and Alameda Research, its sister trading company. In the wake of FTX’s liquidity crisis, users could not withdraw funds from the exchange, leaving customers unable to access their funds.
A liquidator has been appointed to safeguard the funds of its Bahamas-based subsidiary, FTX Digital Markets, pending the outcome of the bankruptcy proceedings.