With the collapse of the first crypto exchange powering FTX, the crypto industry experienced an unprecedented disaster.
The Swiss company is torn between short-term business losses and the prospect of Switzerland emerging from the crisis and becoming a strong global hub for the blockchain industry.
The Bahamas-based FTX Group has recently been hailed as one of the most stable and innovative crypto companies in the world. It combines the world’s second largest cryptocurrency with a profitable investment firm called Alameda Research.
The corporation has now been declared bankrupt in the United States and is being investigated for suspected fraud in several countries.
“In my career, I have never witnessed such a complete break in control of a company and such lack of reliable financial information,”
said the company’s liquidator, who was also involved. Enron’s liquidation, said. the top of the iceberg
Switzerland will certainly feel the main effects of the FTX explosion, but the real damage will be revealed in a few weeks. The industry favors reduced trading volume, venture capital investment, bankruptcy of FTX-related companies, and less risk to cryptocurrencies in the traditional financial sector.
“This is probably just the tip of the iceberg,” said Michael Guzik, executive chairman of Credit Suisse’s CLST platform. “The market is losing faith. Even the most seasoned crypto players right now are saying it’s over.”
“It is difficult to gauge how polluted the Swiss crypto space is by FTX,”
said Martin Burgerr, account manager at Sygum Bank.
“We expect this to be severe for the global industry, with other stratification effects yet to be determined.”
Several Swiss crypto companies, including Bitcoin Suisse, Digital Finance, 21Shares, Sygum, and SEBA, have issued statements stating that they are not in danger of bankruptcy by FTX.
Bitcoin Suisse says that “limited” funds have been frozen on the FTX exchange, but it was not enough to significantly affect its finances. Alameda Research, a subsidiary of FTX, has invested in SEBA, but the bank says it has less than a 1% stake and no voting rights.
Fund freeze
Crypto Consulting, which manages crypto-related funds, said investors locked some assets in FTX, but did not specify how or when the assets would be returned.
FTX Group kicked off its operations in Switzerland this year by acquiring a Swiss law firm specializing in cryptocurrencies. The goal is to make Switzerland the headquarters for events in Europe and the Middle East.
The manager responsible for the business has now changed his social media profiles to separate himself from FTX and does not return calls to swissinfo.ch for comment.
But Switzerland, as the world’s “crypto nation,” hopes to benefit in the long-term from FTX’s debacle. The industry may need to move out of the shadow of an obscure seaport into a country with a stronger regulatory tradition.
Casper Institute board member Ralf Kubri told swissinfo.ch: “The appeal of offshore jurisdictions has decreased. Reputation-concerned institutional clients don’t want to do business with companies there.”
Safe escape
“[The FTX crash] gives Switzerland more opportunities to be a safe haven for investors in times of uncertainty,” said Martin Burgerr of Signum.
This month, the bank announced it had invested 345 million Swiss francs ($363 million) in new customer assets to hedge against volatility. By the end of November, this figure will reach 400 million Swiss francs.
Switzerland has transitioned its financial and corporate law to blockchain-based finance, and national regulators have long been accustomed to the nuances of cryptocurrencies.
This prompted another crypto exchange, BitMEX, to consider moving from the Seychelles outside of Switzerland after being prosecuted by US prosecutors.
“Regulation is necessary to prevent large-scale and repetitive criminal and malicious activity,” Crypto Finance FTX wrote in a failed report.
