New Huo Technology Holdings, which has an office in Singapore, has US$18.1 million (S$24.9 million) of cryptocurrencies deposited with FTX, and warned it may not get its money back from the cryptocurrency exchange which has collapsed in the world’s largest crypto-related bankruptcy in history, said the Hong Kong-listed digital assets firm in an announcement on Nov 14.
“As FTX group entities, including FTX, has filed for bankruptcy protection in the United States on 11 November 2022, the cryptocurrency assets may not (be) able to be withdrawn from FTX,” warned New Huo, which has an office in 71 Robinson Road in Singapore and its headquarters in a building in 100 Queen’s Road Central in Hong Kong, according to its website.
By the close of trading on Nov 14, New Huo’s share price plunged by 14.36 percent to HK$3.52 (62 Singapore cents), with 3.43 million shares traded.
Of the US$18.2 million with FTX, US$13.2 million are assets of New Huo’s clients and US$4.9 million belong to Hbit Limited, a wholly-owned subsidiary of New Huo, disclosed New Huo. On Nov 13, Li Lin, the majority shareholder and non-executive director of New Huo, agreed to provide an interest-free facility of US$14 million to cover New Huo’s liability for potential client losses from FTX if needed, said New Huo’s announcement.
“Far exceeding the safety standards of the industry, the safety of our customers’ assets is always our top priority,” declared New Huo’s website.
New Huo will continue to liaise with FTX to try to withdraw its cryptocurrency assets from the crypto-exchange “as soon as possible”, said its announcement.
FTX was once the world’s third-largest cryptocurrency exchange. FTX and its affiliates said they have more than 100,000 creditors and tens of billions of US dollars in assets and liabilities, reported the Wall Street Journal. Singapore sovereign wealth fund Temasek Holdings is reported to have invested US$205 million (S$281.6 million) in FTX, reported The Independent Singapore on Nov 13.
“The Board anticipates that the financial performance of the Group might be materially and adversely affected in the event that the Incident is not resolved,” New Huo warned, adding its normal business operations will not be affected.
For the six months that ended March 31, New Huo’s suffered a net loss of HK$47.79 million, compared to a net profit of HK$54.1 million in the same period one year earlier, although its revenue grew by 34 percent year-on-year to HK$351.8 million, according to the company’s 2022 interim report.
In Singapore, New Huo has applied to the Monetary Authority of Singapore (MAS) for a digital asset activity licence to provide services including digital payment token services, said the company’s 2022 interim report. The company has operations in Singapore, Hong Kong, mainland China, Japan, and the US, the report said. In all these places, New Huo’s total number of employees increased to 797 on March 31 from 728 on 30 Sept 2021, according to its 2022 interim report.
According to a statement on Nov 13 from John Ray, the chief restructuring officer and chief executive officer of FTX, FTX US and FTX.com “continue to make every effort to secure all assets, wherever located”.
“As widely reported, unauthorized access to certain assets has occurred. An active fact review and mitigation exercise was initiated immediately in response. We have been in contact with, and are coordinating with law enforcement and relevant regulators,” said Ray’s statement.
Only 24 hours after filing for Chapter 11 bankruptcy in the US on Nov 11, US$477 million was moved out of FTX in a suspected theft, said Elliptic Connect, a provider of crypto compliance solutions with offices in Singapore, London, New York and Tokyo.
Toh Han Shih is chief analyst of Headland Intelligence, a Hong Kong risk consulting firm.
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