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FTX Fallout Continues: Visa Dumps FTX, BlockFi Still Suspended, Crypto.com Bypass Bank Run

Key points to remember

  • Visa announced that it would sever its partnership with FTX following the stock market crash.
  • Elsewhere, BlockFi said it would continue to suspend withdrawals due to its exposure to FTX.
  • Finally, Crypto.com saw high drawdowns over the weekend due to concerns over an erroneous transaction.

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The fallout from the FTX saga continued over the weekend and into Monday with little sign of abating.

FTX breaks Visa partnership

Visa has terminated its partnership with FTX.

On Sunday, a Visa spokesperson said the company had “terminated [its] global agreements with FTX” and that its payment card program with Bankman-Fried’s company is being “suspended”.

FTX initially launched its Visa-powered payment cards in January. It announced that it would extend the availability of these cards to 40 other countries in October before the announcement of its collapse and bankruptcy last week.

Visa called FTX’s failure “unfortunate” and said it was “monitoring developments closely”. Visa, which works with at least 65 other crypto companies, said its digital currency efforts will continue with a focus on security and trust.

BlockFi suspension continues

BlockFi, meanwhile, has fully admitted exposure to FTX.

Monday, BlockFi revealed that it has “significant exposure to FTX” and its related companies, including bonds owed by Alameda Research, assets held on FTX.com and a line of credit from FTX.US.

BlockFi said it would attempt to recover its funds throughout the failed exchange’s bankruptcy process. The company said it has sufficient cash to explore its options and is working with outside financial advisers and lawyers.

It’s unclear exactly how much BlockFi is owed. However, the company denied that most of its assets are held by FTX, pointing out that such rumors are false.

BlockFi has suspended withdrawals on friday november 11, due to the collapse of FTX and asked customers not to make deposits at this time. The company said today that it “will continue to suspend many [its] platform activities.

Crypto.com Survives Bank Rush

Finally, Crypto.com faced a bank run over the weekend.

On October 21, the exchange made a mistaken transaction by accidentally sending 320,000 ETH ($400 million) to a Gate.io wallet. The incident happened a few weeks ago, but was not widely publicized on social media until recently.

Concerns around the incident peaked over the weekend. On Saturday, November 12, Crypto.com saw $53 million in user withdrawals within 10.5 hours of 7 p.m. EST.

In a statement to the Wall Street Journal, a Crypto.com representative admitted that the exchange had experienced high withdrawals, but said that “fluctuations in deposit and withdrawal activity [do] does not affect our service levels. Crypto.com apparently avoided illiquidity by moving $33 million from other wallets to meet user demand.

The bank run also roughly coincided with the collapse of FTX, perhaps spurring investor concern. However, Crypto.com insists it has minimal exposure to FTX: the exchange’s CEO, Kris Marszalek, said today that his company had recouped $990 million from FTX. The exchange would only have $10 million of exposure left.

FTX’s collapse continues to be at the center of the news cycle. Other companies will likely disclose links and exposure to exchange failure over time.

Disclosure: At the time of writing this article, the author of this article owned BTC, ETH, and other digital assets.

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