Dominos Keep Falling: FTX’s Crypto Exchange “Liquid” Halts Withdrawals
The collapse of the crypto exchange FTX continues to wreak havoc across the industry, new companies are filing for bankruptcy as contagion spreads. Liquid Global, a crypto trading venue acquired by the failed exchange, halted operations due to recent events.
According to an official announcement, Liquid Global filed for Chapter 11 bankruptcy protection in the United States. As an FTX subsidiary, the company claims it must comply with the bankruptcy proceedings in this country. The company stated:
Due to the Chapter 11 filing by FTX Trading International the ultimate beneficial owner of Quoine Pte. Ltd, Liquid Exchage (Quoine Pte.) is halting all withdrawals – both fiat and crypto currency (…). Fiat and crypto withdrawals have been suspended on Liquid Global in compliance with the requirements of voluntary Chapter 11 proceedings in the United States. Until further notice we would suggest to not deposit either FIAT or Crypto.
FTX Unleashes Demise Of Many Crypto Companies
Across social media, users are negatively reacting to Liquid’s announcement. In 2022, major crypto companies adopted a modus operandi; they compromised users’ funds, halted withdrawals without previous notice, and filed for bankruptcy protection.
In this scheme, users are the most affected, especially those that trusted their entire net worth to the crypto exchange or trading venue. In that sense, users are demanding the platform not to “save the funds for themselves,” while others asked the company to rebrand the exchange from “Liquid” to “Illiquid.”
At the time of writing, Liquid must provide further information on the bankruptcy process. The company is just one of the FTX-owned facing user backlash and pressure from regulators.
Voyager and BlockFi are following a similar trajectory. According to an official statement, the events related to FTX were “unexpected,” but the uncertainty around FTX International, FTX.US, and Alameda Research “forced” them to halt operations. The lending company said:
Until there is further clarity, we are limiting platform activity, including pausing client withdrawals as allowed under our Terms. We will share more specifics as soon as possible. We request that clients not deposit to BlockFi Wallet or Internet Accounts at this time.
The FTX collapse continues to hurt the nascent industry, but it has raised many questions about regulations and their role over the past years. Other exchange executives, such as CEO of Coinbase Brian Armstrong, and legislators believe the U.S. should take a different approach to the crypto industry.
Rather than coercing crypto companies, these might benefit from a clear regulatory framework. U.S. Senator Pat Toomey said:
Congress’ failure to pass legislation creating regulatory guardrails for crypto trading, combined with the complete hostility and lack of transparency by SECGov, has generated a debilitating amount of legal uncertainty. These failures have driven crypto development to foreign jurisdictions that have little or insufficient regulation. We’re now seeing the consequences in the failure of FTX.