Yield App Suspends Operations Amid Liquidation Proceedings

Yield App, a Seychelles-incorporated cryptocurrency investment platform, has announced the immediate suspension of all activities on its platform as it enters liquidation proceedings. The announcement stated that community channels would also be suspended, although a support channel would remain open via the official website, yield.app.

“This follows the realization of portfolio losses incurred through third-party hedge fund managers that held Yield App assets in custody on the collapsed cryptocurrency exchange FTX and who are subject to ongoing litigation,” the platform wrote on social media platform X. Users attempting to access the platform’s website are greeted with the same announcement on its homepage.

Yield App’s most recent blog post, published on June 25, did not indicate that a suspension was imminent. The platform claims the decision to suspend activity was made to “ensure fair and equal treatment for all Yield App’s users and stakeholders.”

Yield App raised nearly $5 million in a hybrid funding round led by Alphabit and Digital Strategies in 2020. However, the platform’s native token, YLD, has plummeted by 58% over the past 24 hours following the news.

Yield App background

According to the official statement, Yield App’s portfolio losses were due to third-party hedge fund managers who held the platform’s assets on FTX, which is currently involved in ongoing litigation. CEO Tim Frost explained that the firm has been pursuing litigation against several hedge funds that incurred losses. After 18 months of recovery actions, the decision was made to shutter the platform in the best interest of creditors, allowing administrators to pursue claims directly.

Despite the announcement, previous statements from Yield App have raised questions about its transparency regarding exposure to the FTX collapse. In a Discord message dated November 10, 2022, Frost reassured users that the firm had “no significant exposure to FTX.” However, he later clarified that while Yield App itself did not have direct exposure, the indirect exposure through fund managers came to light much later, leading to the current legal proceedings.

In 2024, the bankrupt crypto exchange has been involved in multiple sales of claims and assets as part of its bankruptcy proceedings. In February alone, FTX offloaded 8% of its stake in the artificial intelligence firm Anthropic, sold its European arm for $33 million, and planned the sale of Digital Custody for $500,000.

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