Only a month after payments giant Visa announced a partnership with FTX to roll out a debit card program in 40 countries worldwide, Visa abruptly ended the program due to FTXS recent insolvency and bankruptcy issues. A spokeswoman for Visa said that the business is “watching developments closely” and called the situation with the indebted cryptocurrency exchange “unfortunate.”
“The situation with FTX is unfortunate and we are monitoring developments closely. In all our undertakings in digital currency and beyond-our focus on security and trust remains paramount. We have terminated our global agreements with FTX and their US debit card program is being wound down by their issuer,” said a Visa spokesperson.
In October of this year, Visa announced a partnership with FTX to introduce account-linked Visa debit. The focus of the partnership was the expansion of the debit card program to Latin America, Asia, and Europe after its introduction to US customers.
The native cryptocurrency of the FTX trading platform, FTT, increased by roughly 7% in October as word of the relationship between FTX and Visa spread online, hitting a high of $25.62. Following the new twist in the story, FTT is now trading at $1.89.
It is not surprising that organizations like Visa are trying to distance themselves from the disgraced platform given how quickly things have spiraled for the once-reputable cryptocurrency exchange FTX.
Not just Visa but other companies are cutting relations with FTX. On November 11, during FTX’s declaration for Chapter 11 bankruptcy in the United States, the Securities and Exchange Commission of Cyprus, or CYSEC, allegedly issued a statement asking the exchange to suspend operations for its Europe arm.
In addition, US-based cryptocurrency exchange Kraken said that it had cooperated with law enforcement agencies and frozen the accounts of “FTX Group, Alameda Research, and its executives.”
FTX Liquidity Key to Downfall
Last week, Binance CEO Changpeng Zhao declared that Binance will sell all of its FTX Token (FTT) holdings. This unintentionally sparked a bank run, which in turn caused FTX liquidity concerns.
On November 13, FTX and 130 connected businesses, including its sister trading company Alameda Research, filed for Chapter 11 proceedings in the US. Sam Bankman-Fried stepped down as the business’s CEO and John J. Ray III, a seasoned Wall Street bankruptcy lawyer who was most notably the chairman of the embattled energy giant Enron in the early to mid-2000s, replaced him in his position. As the drama played out last week, SBF, on the other hand, experienced a significant backlash from the crypto community.