Another One Bites The [FTX] Dust: Yield App Announces Liquidation Following Insolvency

Yield App, a cryptocurrency investment platform, has commenced insolvent liquidation proceedings following significant financial losses connected to the collapse of FTX. The announcement was made public via Yield App’s official channels, revealing that Stephen Cork and Hadley Chilton of Cork Gully LLP have been appointed as joint liquidators to manage the winding-up process.

The company, incorporated in Seychelles, cited extensive losses from FTX, the failed cryptocurrency exchange, as the primary reason for its financial downfall. The platform, which once assured its users that their deposits were “always safe” and “insured,” is now under scrutiny for these claims as it faces insolvency.

“This decision has been made to ensure fair and equal treatment for all Yield App’s users and stakeholders,” stated Yield App in their announcement.

FTX, led by Sam Bankman-Fried, filed for bankruptcy on November 11, 2022, after a high-profile collapse that shook the cryptocurrency market. The fallout from FTX’s failure has left numerous entities grappling with financial losses, including Yield App. According to the company, its assets were managed by third-party hedge funds that used FTX for custody, leading to the significant losses that have now precipitated Yield App’s liquidation.

The announcement has sparked criticism from various corners of the crypto community. Bennett Tomlin, a popular crypto commentator, posted on X, “This app claimed deposits were ‘always safe’ and ‘insured’ but is now claiming to be insolvent. I believe @YieldApp lied when they made those claims about the safety of deposits.”

Such criticisms underscore the growing distrust and frustration among Yield App’s users who feel misled by the platform’s previous assurances. The situation is further complicated by Yield App’s continued promotion of new projects, such as the Angel Launchpad, which still lists upcoming launches despite the liquidation announcement.

Yield App’s liquidation process will involve attempts to recover assets and possibly pursue legal action against the hedge fund managers involved. Meanwhile, FTX is in the process of asset recovery, claiming it will have $16.3 billion to pay its debts of roughly $11 billion. However, recovery plans have been contentious, with creditors pushing for what they consider a ‘full recovery’ and some even resorting to lawsuits.

On the other hand, Geneva-based Tyr Capital Partners, one of the hedge funds implicated in FTX, is currently facing legal action from TGT, another fund that invested with Tyr. TGT is attempting to recover $22 million lost due to what it claims were Tyr’s negligent risk management practices related to FTX.

Interestingly, European investment firm CoinShares successfully managed to sell its $33.6 million FTX claim to an undisclosed buyer, showcasing a rare instance of successful recovery amidst the broader turmoil.

Information for this briefing was found via Protos and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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