TL;DR
- Yield App, a cryptocurrency investment platform, ceases its operations due to significant losses linked to FTX through third-party fund managers.
- Despite ensuring the safety of deposited funds and having insurance, the platform admits considerable losses, initiating a liquidation process and legal actions against the involved fund managers.
- FTX is undergoing liquidation after declaring bankruptcy in 2022, selling various assets to compensate creditors.
An unexpected news has surprised Yield App’s users and stakeholders. The cryptocurrency investment platform based in Seychelles announced the immediate cessation of all its operations. The decision was made following the admission of substantial losses stemming from its exposure to FTX through third-party fund managers.
Yield App had previously assured its users that deposited funds were safe, even claiming to have insurance to protect investments. However, upon recognizing significant losses managed by hedge funds using FTX as custodian, the platform was compelled to take drastic measures. The company has announced it is in liquidation process and has initiated legal actions against the involved fund managers to attempt recovering part of the lost assets.
Suspension of platform activity ahead of liquidation proceedings
28 JUNE 2024, 04:15 UTC: Yield App Ltd, a Seychelles-incorporated limited liability company, is today, Friday 28 June 2024, announcing the suspension of all activity on the digital wealth platform…
— Yield App (@YieldApp) June 28, 2024
Yield App Ceases Operations and Leaves a Consultation Channel Open
The discrepancy between Yield App’s previous statements regarding its exposure to FTX and the reality of the losses incurred only served to generate confusion and concern among investors. The sudden closure of the platform implies the immediate suspension of all community channels, though it has been ensured that a support channel will remain operational to address inquiries from affected users. The measure aims to ensure fair and equitable treatment for all platform users.
On the other hand, FTX, once one of the most important crypto exchanges in the industry, declared bankruptcy in November 2022 and continues its process of asset liquidation and claims. Sales of claims and assets by the exchange are intended to compensate creditors within the framework of its bankruptcy procedure. Yield App now faces the challenge of managing the financial and legal consequences of its relationship with the convicted Sam Bankman-Fried’s company.
Yield App has betrayed the trust of its users. The outcome has been catastrophic for both the platform and its users. Once again, the underlying risk associated with asset custody in the crypto industry has been exposed. This is a critical moment to advocate for transparency and user asset management by companies in the sector.
