Yield App, a crypto trading platform based in Seychelles, will shut down immediately, citing exposure to FTX.
The FTX contagion in 2022 remains a thorn in the flesh of the crypto community. The impact of the implosion remains visible even months after the sentencing of its founder, Sam-Bankman Fried (SBF).
Yield App Shuts Down After Hiding Exposure to FTX
In the announcement, the firm said it had suspended all activity on its trading platform as liquidation proceedings commence. Along with the termination of activities, the firm has taken down its community channels but left the support channel open for further information.
“With immediate effect, all activity on Yield App will be halted as Yield App consults with liquidators. This decision has been made to ensure fair and equal treatment for all Yield App’s users and stakeholders,” read the announcement.
Yield App attributed the shutdown to the collapse of FTX, citing exposure. Specifically, Yield App highlighted “portfolio losses incurred through third-party hedge fund managers that held Yield App assets in custody” on the failed cryptocurrency exchange.
While this is understandable, it is surprising, given the firm’s previous reassurance that it did not suffer significant exposure to FTX. Tim Frost, the firm’s CEO, shared the message on Discord on November 10, 2022, a day before FTX filed for Chapter 11 bankruptcy and SBF’s resignation.
The twist shows that the reassurance was false, a made-up story intended to assuage customers. Therefore, the Yield App’s transparency regarding its exposure to the FTX collapse is now in doubt. Lou, founder and CEO of protocol builder XBorg, said lack of transparency is a threat to innovation.
“Greed in the crypto industry is stifling innovation. The pursuit of unsustainable high yields and quick profits is overshadowing long-term advancements,” Lou wrote.
It remains unknown how the litigation will bode for retail investors as liquidation proceedings continue. The firm is trying to release its funds stuck on the now-collapsed FTX crypto exchange.
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