Just yesterday, it emerged that Brisbane-based crypto exchange Swyftx was in search of a short-term liquidity injection to help steer the company through what’s proved to be a long and cold crypto winter. If you’re looking for a bit of context, here’s the background as reported by The Chainsaw.
It’s now been reported by the Australian Financial Review (AFR) that Swyftx has rejected concerns related to the exchange’s financial heath.
While some may have interpreted the exchange’s move for capital as a potential cash flow problem, Swyftx has asserted that not only is its Superhero acquisition on track – it still owes $55 million – but that the fresh capital raise is in fact part of its global expansion plans.
We haven’t put a timeline on full integration between Swyftx and Superhero. Our priority is getting the merger right for our customers and regulators, not getting it quick. If that means it takes more time to integrate the platforms, so be it.”Swyftx statement
The company also said that it wasn’t exposed to the FTX meltdown in any way. Swyftx is known as a ‘crypto broker’ and not a ‘market maker’ – it uses Binance as a liquidity provider to match trades, the typical market making function.
Everything is fine – Swyftx
Swyftx told AFR that Aussie crypto businesses were operationally sound, even though FTX had tainted the overall impression of crypto exchange’s financial standing.
Notably, the company was one of the signatories to Blockchain Australia’s statement that came out yesterday committing that user deposits matched the on-chain assets 1:1 – no doubt to a growing chorus of cries for proof-of-reserves.
“FTX isn’t the first business to treat its customers with contempt and sadly it won’t be the last. But it is an imperative that no cryptocurrency exchange on our own shores ever exercises such a total failure of corporate controls.”Alex Harper, co-founder & chief executive of Swyftx
Interestingly, Swyftx also has an ‘Earn’ product which has led to widespread pause of customer deposits in other jurisdictions, due to exposure to Genesis Global Capital. When asked by AFR how Swyftx generated the yields, Swyftx said it had trimmed exposure to stablecoins and other digital assets. “We took a decision early in October to limit our Earn offering to stakeable assets,” the company said.
At this point in time, it’s unlikely that anyone outside of Swyft’s executive team, investors and board of directors knows the true state of affairs. It’s only natural that the company has sought to get on the front foot and deny insinuations of financial distress. Sceptics would say that denial is precisely the route that companies in Swyftx’s position would choose.
Irrespective, it’s clear that a hunt for a short-term cash injection in a down market and negative macro environment is not a good look.