Yield App has recently announced the halt of all activity on its crypto investment platform due to a loss of funds on FTX after it collapsed a year and a half ago. The company stated that its assets were held by third-party hedge fund managers using FTX as custody and is now preparing for liquidation while taking legal action against these managers. Yield emphasized that this decision was made to ensure fair treatment for all its users and stakeholders. Despite previous claims of deposits being safe and insured, the current situation has raised concerns about the security of funds on the platform.
Yield, a Seychelles-incorporated firm, offers various crypto trading activities and is currently in the process of liquidation. The company’s announcement has brought attention to hedge fund management firm Tyr Capital Partners, which was sued in February 2024 for allegedly ignoring risk limits and investor warnings regarding FTX. The Financial Times reports that TGT is seeking to recover $22 million lost to FTX from Tyr. FTX filed for bankruptcy in November 2022, with plans to sell remaining assets to pay off debts. Both FTX US and Yield were previously audited by Armamino LLP, which no longer provides auditing services.
As part of the asset recovery process, FTX is pursuing a $5 million claim from a former hotel that hosted right-wing fringe groups. Recovery plans have been put in place for FTX creditors, although there are concerns about the extent of a ‘full recovery.’ One firm that managed to recoup its FTX losses was European investment firm CoinShares, which sold its $33.6 million FTX claim to an undisclosed buyer. Despite the challenges faced by FTX and its creditors, efforts are being made to recover funds and address the aftermath of the collapse.
The liquidation of Yield App and the ongoing legal actions against third-party managers highlight the risks involved in the crypto investment space. Users and stakeholders are advised to exercise caution and conduct thorough research before engaging in any investment activities. The recent developments also underscore the importance of transparency and accountability in the management of funds and assets in the crypto industry. It is crucial for companies operating in this sector to adhere to regulatory standards and implement robust security measures to protect the interests of their clients.
In the wake of the collapse of FTX and the subsequent liquidation of Yield App, the broader crypto community is likely to become more vigilant about the risks associated with investment platforms and third-party custody arrangements. The need for greater oversight and regulation in the crypto space has been underscored by recent events, prompting calls for more stringent measures to protect investors and prevent similar incidents in the future. As the industry continues to evolve, it is essential for stakeholders to work together to establish best practices and standards that promote trust and confidence in the crypto market.
The fallout from the collapse of FTX and the subsequent liquidation of Yield App serves as a cautionary tale for investors in the crypto space. While the promise of high returns and quick profits may be enticing, it is crucial to conduct due diligence and assess the risks involved before committing funds to any investment platform. By staying informed, exercising caution, and seeking advice from financial experts, investors can mitigate potential losses and navigate the complex landscape of the crypto market with greater confidence. Ultimately, the resilience and adaptability of the crypto industry will be tested as it strives to recover from setbacks and build a stronger foundation for future growth and innovation.
