• 17 July, 2024
News

FTX Subsidiary LedgerX Switches Banks Amid FTX Bankruptcy

LedgerX, a crypto derivatives platform that was acquired by FTX last year, has announced that it will stop using Silvergate Bank for its domestic wire transfers and switch to Signature Bank instead.

The move comes amid the bankruptcy of FTX, which collapsed after a series of regulatory actions and lawsuits against its founder Sam Bankman-Fried. LedgerX was one of the few profitable and solvent parts of the FTX empire and has operated independently since the bankruptcy.

FTX, led by new CEO John Ray III, won court clearance to sell LedgerX and three other firms under Bankman-crypto Fried’s umbrella at a bankruptcy hearing. Thus far, organizations like as Gemini and Blockchain.com have made bids to buy the firm.

Silvergate Bank, which was known as a crypto-friendly bank that served many crypto firms and exchanges, has also faced troubles recently. The bank reported a $24 million loss in Q4 2022 due to its exposure to FTX’s debt. It also faced a lawsuit from another crypto firm, Bitfinex, which accused it of freezing its accounts without notice.

On the other hand, Signature Bank is another crypto-friendly bank offering a blockchain-based payment platform called Signet. The bank has been expanding its presence in the crypto space and has partnered with several crypto firms, such as Gemini and Paxos.

LedgerX customers are affected

LedgerX told its customers they should use Signature Bank for domestic wire transfers starting from March 1st, 2023. The platform said that it would continue to offer derivatives products based on Bitcoin and Ethereum cryptocurrencies.

Derivatives products are contracts that derive value from an underlying asset, such as a cryptocurrency. LedgerX is one of the few platforms that is regulated by the Commodity Futures Trading Commission (CFTC) and offers physically settled Bitcoin options and futures contracts. This means traders receive actual Bitcoins when their contracts expire instead of cash.

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