Multiple Crypto Exchanges Suffer from FTX’s Aftermath

The crash of bankruptcy triggered by crypto exchange FTX escalates to the rest of the crypto industry. A Huobi-related subsidiary is the latest victim.

Citing “Failure to withdraw cryptocurrency assets from crypto exchange FTX”, Hong Kong-listed company New Huo Technology Limited (HKEX: 1611) announced inside information Monday that around $18.1 million worth of cryptocurrencies owned by its subsidiary Hbit Limited, are deposited in crypto exchange FTX, according to the latest announcement published on the Stock Exchange of Hong Kong Stock.

Among 18.1 million capital, around $13.2 million is “client’s asset based on the client’s trading request and approximately USD4.9 million is asset of Hbit Limited”. The listed company warned that the crypto assets “may not be able to be withdrawn from FTX” due to the filing of bankruptcy protection declared by FTX on Nov 11, which is suffering from a liquidity crunch.

The board of the company emphasised will continue to provide compliant, professional and safe virtual assets financial service to clients:

“The Board is of the view that the Incident currently does not affect the normal business operations of the Group. As Hbit Limited is legally and operationally separated from other business entities of the Group, other assets and business lines of the Group will not be affected.”

The Board acknowledged its financial performance could be affected if “the incident is not solved.”

Meanwhile, another Hong Kong-based crypto exchange, AAX, is also suffering from the recent turmoil. AAX said Sunday that the exchange continues the suspension of withdrawals for seven to ten days due to “a scheduled system upgrade” to protect users from the malicious attacks

Ben Caselin, AAX Vice President, tweeted in the early morning Monday, acknowledging this is “bad timing for a scheduled maintenance at @AAXExcahnge,” adding that the exchange “aimed to address serious vulnerabilities, to be prolonged for more than 24 hours. Out of extra precaution this will take longer,” urging the public to allow AAX to open up gradually.

However, AAX emphasized that the exchange has no financial exposure to FTX or its affiliates, and its digital assets remain intact, with a significant amount stored in cold wallets, according to the statement.

FTX filed bankruptcy protection last Friday after its exchange experienced a critical liquidity crunch, as its native token, FTT experienced a massive price plunge. FTX failed to get rescue from its major competitor Binance through acquisition, citing “the issues are beyond our control or ability to help.”

Reportedly FTX was accused of unauthorizedly using its client’s capital to foster its sister trading Alameda Research. In addition, FTX also suffered from a hacking incident last Friday. Over $600 million was breached from its crypto wallets. Founder and former CEO Sam Bankman-Fried has stepped down.

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