Crypto platform Yield App stopped working due to FTX bankruptcy

Yield App claims it suffered portfolio losses because third-party hedge fund managers held its assets on crypto exchange FTX, which collapsed in November 2022 as a result of a multibillion-dollar fraud by its management. Now these assets, according to representatives of Yield App, are the subject of ongoing litigation. Yield App CEO Tim Frost said the company itself also initiated legal proceedings against several hedge funds whose activities led to losses. Some of these are still ongoing, but after 18 months from the date of filing for collection, Yield App was recommended to close the platform in the interests of creditors.

However, immediately after the collapse of FTX, on November 10, 2022, Frost assured users in the platform’s Discord channel that the Yield App would not experience a significant impact due to this event. In a new comment to Cointelegraph, the top manager explained that he was then referring to the direct impact of the exchange’s bankruptcy on his platform: “The consequential damages we suffered because of the fund managers only came to light much later when we were involved in litigation.”

FTX managers continue to sell off exchange assets to return funds to clients. This year, FTX sold an 8% stake in AI startup Anthropic and its European division, and the sale of the Digital Custody platform is also expected. Earlier this month, FTX clients filed a lawsuit calling the exchange's bankruptcy process a "second act of theft" of their assets. They demanded that the ownership of FTX assets be established in the amount of $8 billion.