Crypto platform Bitvo terminates deal to be acquired by FTX


Bitvo says it has no exposure to FTX and is not part of the company’s bankruptcy proceedings

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Calgary-based crypto trading platform Bitvo Inc. made a splash in June with an agreement to be acquired by FTX Trading Inc., part of an exchange that had attracted hundreds of millions of dollars from venture capital heavyweights including Sequoia Capital, Softbank Capital, and Tiger Global. 

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But the plan to make Bitvo FTX’s Canadian beachhead has been terminated in the wake of the latter’s spectacular collapse last week, according to a statement from the Canadian company.

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“In light of recent events, Bitvo Inc. announces that its shareholder, Pateno Payments Inc., has terminated its previously announced agreement with FTX … in accordance with the terms of such agreement,” the statement said, adding that the Canadian company has no material exposure to FTX, is not a party to the Bahamas-based crypto’s bankruptcy proceedings, and has never “owned, listed or traded” FTX’s token FTT.

“Since inception, Bitvo has operated as an independent, Canadian crypto asset trading platform,” the statement said.

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Under terms of the company’s registration with Canadian securities regulators as a “restricted” dealer, obtained in April, Bitvo operates on a full reserve basis, meaning it does not lend customer funds. The company is also registered with FINTRAC as a money services business in the virtual asset service provider category.

“Bitvo’s operations have and are expected to continue unaffected (by the FTX problems), with trading operations as well as withdrawals and deposits continuing seamlessly,” the company said in Tuesday’s statement. 

When the acquisition by FTX was announced in June, the companies said Bitvo’s buying, selling and trading operations would be “integrated into the FTX global team serving the Canadian market in a variety of capacities.”

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The acquisition had been targeted to close in the third quarter, subject to regulatory approval and customary closing conditions.

Sam Bankman-Fried, the 30-year-old founder of FTX, was quoted in a news release saying he was “delighted” to enter the Canadian marketplace and continue to expand FTX’s global reach. 

“Our expansion into Canada is another step in proactively working with cryptocurrency regulators in different geographies across the globe,” Bankman-Fried said in June.

Regulators in the United States and Bahamas are now reportedly probing FTX amid allegations that millions of dollars of client money have gone missing, and that funds were being diverted to a related trading company owned by Bankman-Fried. 

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He resigned as chief executive last week in the wake of the collapse that began with a liquidity crisis that left users unable to access their funds.

Larger rival exchange Binance Holdings Ltd. called off a proposed rescue last week. In a Nov. 9 tweet, the larger crypto exchange said it was pulling out of acquiring FTX due, in part, to “news reports regarding mishandled customer funds and alleged U.S. agency investigations.”

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A red banner at the top of FTX’s website Tuesday said the crypto exchange was unable to process withdrawals and added that the company would “strongly advise against depositing.” The website said all “onboarding” of new clients was suspended until further notice.

FTX’s rapidly sinking fortunes highlighted the exposure to the crypto world of a second large Canadian pension fund.

The Ontario Teachers’ Pension Plan Board invested US$95 million in FTX in two tranches late last year and early this year. The pension manager, which had $242.5 billion in assets at the end of June, said last week that its potential exposure is limited to less than 0.05 per cent of the plan’s total net assets.

In August, the Caisse de dépôt et placement du Quebec said it had written off a US$150-million investment in fizzled crypto lender Celsius Network LLC. Caisse chief executive Charles Emond said at the time that the Quebec pension fund was keen on “seizing the potential of blockchain technology” and perhaps the investment in Celsius was made “too soon” in the company’s development.

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