Hong Kong's leading crypto retail operator says it ceases trading as FTX fallout roils sector

Dongwoo Farm To Table

18/11/2022 08:34

By Georgina Lee
       HONG KONG, Nov 18 (Reuters) - A leading cryptocurrency
retail service provider in Hong Kong said it has ceased trading
as the broader fallout from the collapse of FTX, and solvency
issues at other major crypto firms, continues to roil the
sector.
   Genesis Block, which at one time operated one of Asia's
biggest bitcoin ATM networks, said it would be closing down its
over-the-counter trading portal on Dec. 10, according to an
email to customers sent by its compliance department reviewed by
Reuters. 
    "We have ceased trading, as we don't know which
counterparties would fail next, so we would rather close out all
our positions to regain some of our liquidity," chief executive
Wincent Hung told Reuters this week. 
    The company is also asking customers to withdraw their
funds, the email shows, and will not accept new customers.
    Genesis Block has no connection with a separate crypto
player called Genesis Global Capital which suspended customer
redemptions this week.
    Even before FTX's bankruptcy, Genesis Block had been winding
down its Hong Kong business, according to three people familiar
with the situation, cutting ties with the failed exchange
earlier this month.
    One person with knowledge of the matter said one Genesis
Block official was previously a director in FTX Hong Kong, but
resigned from the directorship this month. FTX Hong Kong is one
of the about 130 FTX-affiliated companies backed by Sam
Bankman-Fried that have filed Chapter 11 bankrupcy proceedings
in the United States.  urn:newsml:reuters.com:*:nL4N32804K
    The people declined to be identified because they were not
authorised to speak to the press.
    Genesis Block executives declined to comment. 
    Genesis Block's website still shows a guide to how to buy
FTT  FTT=CCCL , the native token of the failed exchange, using
the ATM network, which spans 29 locations in Hong Kong and six
in Taiwan. 
    The ATMs are now operated by a brand called CoinHero, which
is expanding in Hong Kong after Genesis Block sold the business
to a third party last year, according to the people with
knowledge of the matter.
    CoinHero's website offers a guide for its customers on how
to buy FTT through Genesis Block's trading desk in Hong Kong.
    CoinHero did not reply to Reuters' request for comment.
Genesis Block didn't respond to questions on the ATM network. 
    Genesis Block's withdrawal from Hong Kong, ranked by market
data provider Forex Suggest as one of the most "crypto-ready"
cities in the world in terms of the number of ATM relative to
its population, underlines the challenges in enforcing investor
protection in the highly connected $900 billion crypto world.
 urn:newsml:reuters.com:*:nL8N32C00R
    In Hong Kong's busy Causeway Bay shopping district,
cryptocurrencies bitcoin  BTC=BTSP , tether and dogecoin can be
traded easily at both ATMs and trading desks.
    Meanwhile the city's Securities and Futures Commission (SFC)
is currently consulting the industry on its proposal to allow
retail trading of virtual assets in a move it hopes will bolster
Hong Kong's status as a fintech hub.  urn:newsml:reuters.com:*:nL1N31W0DD
    If adopted, such a move would represent a major relaxation
of the city's virtual asset services provider licensing regime,
expected to become effective in March 2023. The SFC had
initially proposed limiting trading to professional investors
only.   
 (Reporting by Georgina Lee; Editing by Kenneth Maxwell)
 ((Georgina.Lee@thomsonreuters.com;))