Yield App Ceases Operations Following Losses Incurred from Fund Managers Holding Assets on FTX, Now Bankrupt
The cryptocurrency investment platform Yield App, incorporated in the Seychelles, announced on June 28th that it will be ceasing all operations with immediate effect. This decision was made to ensure fair treatment to all users and stakeholders of Yield App.
This decision comes after portfolio losses caused by third-party hedge fund managers who held Yield App’s assets in custody on the crypto exchange FTX, which are subject to ongoing litigation.
Impact on Investors
Yield App has suspended its community channels, but a support channel will remain open to the public through the official website. Yield App CEO Tim Frost stated that the company is pursuing legal action against several hedge funds that suffered substantial losses on assets held on FTX. After 18 months of recovery efforts, administrators advised closing the platform in the interest of creditors, allowing administrators to pursue claims directly.
Inconsistencies in FTX Exposure
Despite the closure announcement, previous statements from Yield App have raised doubts about the company’s transparency regarding its exposure to the collapse of FTX. In a Discord message dated November 10, 2022, Frost reassured users that the firm had “no significant exposure to FTX.“ However, he later explained that “the indirect exposure through these fund managers emerged much later,“ leading to ongoing legal proceedings.
The Yield App announcement comes amidst confusion and frustration among users. Many users have expressed their bewilderment with the situation, questioning how the company could be affected by FTX two years after its collapse, despite an official statement stating otherwise. The belated revelation of indirect exposure through fund managers has added to investors’ confusion and frustration.
