© Reuters. FILE PHOTO: Counterfeit currency symbols are placed on US dollar bills in this photo taken on November 28, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
By Georgina Lee
HONG KONG (Reuters) – A leading cryptocurrency exchange in Hong Kong said it has stopped trading as the sharp fall in FTX, as well as problems at other major crypto businesses, continue to hurt the sector.
Genesis Block, which once operated one of the largest bitcoin ATM networks in Asia, said it will close its over-the-counter sales portals on Dec. 10, according to an email to customers sent by the department following an analysis by Reuters.
“We have stopped trading, because we don’t know which companies will fail, so we may close all our facilities to refinance,” CEO Wincent Hung told Reuters this week.
The company is also asking customers to withdraw their money, the emails show, and will not accept new customers.
Genesis Block has no relationship with another crypto player called Genesis Global Capital which has suspended customer redemptions this week.
Even before FTX collapsed, Genesis Block had wound up its business in Hong Kong, according to three people familiar with the situation, cutting ties with the failed exchange earlier this month.
One person familiar with the matter said a Genesis Block executive was a director at FTX Hong Kong, but stepped down this month. FTX Hong Kong is one of approximately 130 FTX-affiliated companies supported by Sam Bankman-Fried that have filed for Chapter 11 bankruptcy in the United States.
The people declined to be identified because they were not authorized to speak to the media.
Genesis Block officials declined to comment.
The website of Genesis Block still shows a guide on how to buy FTT, the failed exchange token, using the ATM network, which passes through 29 locations in Hong Kong and six in Taiwan.
The ATMs are now being used by a token called CoinHero, which is growing in Hong Kong after Genesis Block sold the business to a third party last year, according to people familiar with the matter.
The CoinHero website provides guidance to its customers on how to purchase FTT through the Genesis Block trading desk in Hong Kong.
CoinHero did not respond to Reuters’ request for comment. Genesis Block did not respond to questions about the ATM network.
The removal of the Genesis Block in Hong Kong, which is placed by the provider of market data Foreign Currency Consider as one of the “most prepared” cities in the world in terms of the number of ATMs compared to its population, shows the difficulty in enforcing the protection of investors connected to the $900 billion crypto country.
In Hong Kong’s busy Causeway Bay district, cryptocurrencies bitcoin, tether and dogecoin can be easily traded at ATMs and sales desks.
The city’s Securities and Futures Commission (SFC) is currently negotiating with the companies on their proposal to allow trading of all kinds of products in a move that it hopes will strengthen Hong Kong’s position as a fintech hub.
If approved, such a move would represent a major liberalization of the city’s licensing system, which is expected to come into effect in March 2023. Initially, the SFC had proposed limiting sales to professional investors only.